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What is the CPM Group's analysis and forecast for gold, silver and the stock market for the second half of 2014?

January 6, 2016
Video Transcript

We're looking at September, October, as a time when you might see a more forceful upward move in gold and silver prices start to emerge again. The reason we're saying that is, if you look at the gold and silver market, again you have large investors who continue to buy large amounts of silver and gold, but you've lost the froth, you've lost the shorter-term investors, you've lost the people who have grown disenchanted waiting for hyper-inflation or collapse of the Euro, you've lost the momentum traders, and technical chart trading type of people. We're looking for some sort of event to cause those people to re-enter the market.

September, October, are important for a couple of reasons. First off, it is just before what promises to be a very nasty divisive mid-term election in the United States. There are also some very important elections going on in other countries that are important investment markets for gold and silver, including India. So you'll see some focus there. In addition to that, one of the things that we're looking at is the stock market. People have in 2013 moved away from buying gold and silver to buying stocks because stocks were rising. Not long-term investors necessarily, but short-term momentum traders have seen the stock market rising, gold and silver prices falling, and they've shifted gears. We're looking for correction in the stock market at some point in 2014. Our view is that it might not occur until September or October. September and October are very important times because every major downward draft in the stock market has occurred in September and October in history. So there's some certain seasonality there that lends its credence. That seasonality may be tied into elections at that time.

Frankly, a lot of people who spend more time looking at the stock market than we do are thinking that you could see a 10 or 15% down draft in U.S. stock industries in the first 4 months of 2014. We think, you know, they're calling this a mild correction, but we think that if the stock market coughed up half of what it made in 2013 in a short period time in 2014 that may well send a shock wave through the investment market and start to rekindle those shorter-term investors to re-enter gold and silver.

The gold and silver markets are very tight, so it would take very little buying by these short-term investors on top of the ongoing long-term investment demand, to drive the prices up sharply. Once the prices start rising, there are any numbers of people who are waiting for a sign that the prices have stopped falling and are starting to rise again to re-enter the market.

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