Sean Brazney Interviews CPM Group's Jeff Christian - March 2019 Part II
Sean Brazney: Here at Monex, we get a lot of people that call us for the first time thinking about accumulating gold and silver and precious metals. They have a question, often is... what percentage should I put into gold and silver? Do you have some advice for them?
Jeffrey Christian: Yeah, it really depends on the individual investors, risk tolerance and other issues, the level of their wealth, their age, and other factors. With that said, you start with a 50/50 split. Say let’s invest in precious metal from a certain percentage of our wealth in precious metal. We'll spend it, to start with, on an academic basis so that 50/50, 50% of my amount will be on gold and 50% goes into silver. Then you start considering your individual situation. That's where the higher risk tolerance may lean more towards silver, because it's a more volatile price and they can have capital appreciation buying some silver as it rises and falls fast in lower prices. Investors with a lower risk tolerance, or maybe older, or having a longer-term focus on their investments may lean more toward gold. So, if you start at that 50/50 split and then you start saying what's my particular circumstances, I think a lot of investors will lean towards more than 50% in gold and less than 50% in silver, but it really varies on who you are and how much active risk you have.
Sean Brazney: I'd like to end with the lesser known precious metals-- platinum and palladium. Platinum vs. Palladium. Do you have some input there?
Jeffrey Christian: Yes, palladium prices, obviously, has risen very sharply. We think that palladium prices have further to go over the next three to six months, but they'll probably getting to a point where they're going to peak. Platinum by contrast has fallen very sharply. We don't see it falling much sharper, because we think that the fundamentals are becoming more supportive. We're telling our clients now to get ready. Not necessarily do it today, but over the next six months we think that there will be a time where palladium tries to... will be showing signs of plateauing and it will be time to buy platinum and take some profits out of palladium. So, buy platinum, but sell palladium. Trade that ratio to some extent. Simply put, Palladium is getting high and platinum has been very low. Part of the reason why we're saying that is we're moving toward the production of the 2020 modeling years in automobiles. We think that what you'll see, with the 2020 models, is a much more intensive move away from palladium back toward platinum, in auto cast earnings by the auto industry. So, we think that you'll see stronger fabrication demand for platinum and lower fabrication demand for palladium in the auto sector, which is the largest use of both of these metals, starting in the second half of this year, as the 2020 models are made. That may well be the occasion for palladium to top out and for platinum to start trading at a higher ratio than it is to palladium.
Sean Brazney: Well, Jeffrey, thank you very much for your valuable input and information. Thank you for being with us today. It sounds like right now might be a great time to accumulate precious metals. We encourage you to call Monex today. Talk with our account representatives and find out which metal might be best for you.