What is the CPM Group’s forecast for gold and silver in 2017 and beyond?
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Jeff Christian: We like gold and silver. We expect gold prices to get to record levels within the next 3 to 10 years. We expect silver prices to rise probably back toward record levels, possibly exceeding them, in the same period of time. Silver has a few negatives, relative to gold, in that there is a lot of supply around that's out there. It has some real positives. On a short-term basis, because the silver market is so small in dollar value, compared to the gold market, it tends to be more volatile. So, some people say it's high-octane gold and some investors treat it as high-octane gold, and that's actually a beneficial factor for silver. In addition to which, because it has a lower unit value it has more use in coinage. I think I mentioned earlier, if you look at 1949 China, when the communists took over, the major currencies in circulation in China were U.S., Spanish, and Cuban silver dollars, or pieces of eight in the case of Spain and Cuba. You see that silver is much more useful as a transactional substitute for domestic currency. So, I think, that's there too. You see a lot of investors, it's interesting, because they don't see themselves as silver investors, they see themselves as wealth holders. They call themselves "silver stackers," and they're right. They're buying silver coins because they see the need to possibly have to use these, and I think that's a real factor there. Right now, investors are buying about 100 million ounces of silver per year globally, physical silver.
Our view is that if they continue to buy 100 million ounces of silver per year the price probably will stay in the $15 - $22 range, but if they go back to 150, 180, or 220, which were the levels that they were buying at from say 2007 to 2012, or 2013, then the price of silver will rise much more sharply. So, the silver market is very finely geared to a relatively small increase in investment demand for physical silver that could lead to a price. I said that there's a lot of silver out there and there is a lot of silver out there, but the thing about the silver that's out there is that the people that own it, by and large, don't want to sell it. The same is true for gold. We have seen some selling over the last few years in both gold and silver, but by and large, when investors buy gold and silver, they want to hold it. So, what you find is that you can look at the fundamentals and say that silver is out there and it has a risk of coming back to the market, swamping the market and driving the price down. But that risk is relatively low, because the reality is that the people who own that silver, by and large, want to hang on to it and if they do see the price of silver fall they're probably going to buy more.