A Year for Accumulation, Jeff Christian July 2019 Part 2
Sean Brazney: Hello, my name is Sean Brazney, Sales Director for Monex Deposit Company. I'm here with Jeffrey Christian, Managing Director of CPM Group and Author of our, A Year for Accumulation Report. We did see the dollar break a long-term monthly uptrend while gold was breaking out of and above a long-term monthly resistance level. Do you think this has the makings of potential trend reversal?
Jeffrey Christian: We're definitely seeing the beginnings of a major shift in global attitudes toward the dollar and toward gold. We saw a lot of demand for gold from shorter-term investors in the second half of June into the first half of July. You're also seeing, as I mentioned earlier, greater reluctance about the dollar, in terms of foreign investors and Central Banks. So, I think that what you’re seeing is a greater reluctance to hold dollars. In addition to that, investors want dollars for a variety of reasons, one of which is, that they want to invest in the U.S. economy, or the U.S. stock market, or the U.S. real estate. With the gathering trade wars and the seeming, to outsiders, irrationality of the trade wars, you know, we've had threats against China, but we've had threats against Mexico, and the EU, just about everybody except maybe Israel, has been threatened with sanctions and tariffs and import restrictions. In that kind of environment, you're finding foreign investors saying, "I don't want to invest as much in the U.S. as I had." We're seeing it personally in the business that we conduct, a lot of foreign investors simply not interested in investing in U.S. companies or U.S. stock market at this time. And when you're doing that, when you're pulling back from investing in the U.S., you don't need dollars to finance those investments and so there's less demand for the dollar and the dollar can weaken.
Sean Brazney: Also palladium today hit a new historic high and in our report, the report you did for us, you mentioned something that I think a lot of investors may have missed or overlooked and that is palladium may benefit from an interest rate cut. Can you explain more why?
Jeffrey Christian: Well, right now, you've seen a very sharp decline in auto sales in China this year, as well as, about a 1.6% decline in U.S. auto sales. The U.S. and China are the two largest markets for light duty passenger cars and in China and the United States these are gasoline powered. So, they use palladium intense catalysts. The palladium market, for all of its price strength, has seen some weakness in demand from fabricators who use the stuff in auto catalysts. If you have a rate cut in the United States and if that flows through to rate weakness in other countries, you might see a revival in auto sales to some extent, and if you do see that, then the auto catalyst manufacturers are going to need more palladium and they'll be coming into the market for that, and that will put additional upward pressure on the palladium price.
Sean Brazney: Jeffrey, thank you very much for again your time and your knowledge. A great opportunity for our investors right now to call Monex and ask for your free, A Year For Accumulation Report.