Mike Maroney Interviews CPM Group's Jeff Christian on December 2018
Mike Maroney: My name is Mike Maroney, and today, we're doing our final video of 2018 in our video series, "Prepare & Diversify with Gold and Silver." I'm here with Jeffrey Christian, the Managing Director of the CPM Group, one of the top technical and fundamental analysts in the precious metals business, as far as, the entire world is concerned. One, Jeff, I want to thank you for working with us all this year. Needless to say, a lot of our customers and a lot of our perspective customers are kind of wondering, with everything that's going on, why hasn't gold and silver performed a little bit better in 2018? Do you think 2019 will be a better year?
Jeffrey Christian: I think 2019 will be a better year for gold and silver, because I think it will be a worse year for the stocks, stock markets, and the dollar. I think what we've seen in 2018 is sort of like a top winding up. There's been a gathering of problems, political problems, not only in the United States, but in England, and Europe, and in other countries. Yeah... you've seen a gathering of political problems, economic problems, financial problems, but the stock market for all of its weakness over the last two or three months, still is sort of in a range that it's held throughout the year. As long as that's been happening and the U.S. economy has been stronger than people thought it would be over the course of this year, you've seen investors stay away from gold and silver. With that said, I do think there is a lot of interest in gold and silver, but it's inertial interest right now. People are waiting for a sign that... A) the stock market is going to fall sharply and then I think you'll see a surge into stocks... or into gold and silver rather.
Mike Maroney: Ok, well, next week we have the Federal Reserve and a lot of people have been speculating that maybe they don't raise rates. What's your thoughts on that?
Jeffrey Christian: Our expectation is that the Fed will raise rates next week and that the verbiage in their release will kind of signal that they want to hold steady. That they'll continue to watch for weakness in the economy, but they’re going to probably hold steady with their interest rate objectives, which means two, three, maybe even four interest rate hikes over the course of 2019. You know, there's been this view that they're backing off and that they're more inclined to pause in raising interest rates. And I do think that they are more inclined to pause in raising interest rates in 2019, but I think that they're going to want to re-enforce the view that it's steady as she goes as long as there is. PPI came out today, the day that we're recording this, and it's showing a lot of strength in non-energy final goods, which I think suggests that there are inflationary pressures that the Fed is going to be continuing to watch.
Mike Maroney: So, they raised rates in December. Potentially, stay on the path for two or three additional hikes and potentially even four. Obviously, they have to worry about inflation with CPI and PPI numbers. All of that sounds like we could see a much better environment for the precious metals in 2019 and lot of that will be dependent upon if the stock market sells off, is that what you're saying, Jeff?
Jeffrey Christian: Right, ultimately it depends on the interest rates and if the interest rates continue to rise, as we think they will, at some point the stock market is probably going to make an even bigger move downward. When the stock market comes off, the dollar comes off, and when the stock market and the dollar come off in an environment of rising interest rates, you're going to see increased interest in gold and silver. And I think the prices go up at that point.
Mike Maroney: And with everything that's going on geopolitically, politically, there is a lot of uncertainty. So, those basic fundamentals, add in all of the other variables, and 2019 could be a very interesting year, as far as the metals, correct?
Jeffrey Christian: We're calling it the year of big developments. I think that this was the year of small consequences and next year is going to be the year of big developments. All of the political issues that you've seen in the United States and the UK that have been gathering steam this year, I think they move toward a resolution next year and they have a much more negative implication for both the U.S., and the UK, and global economies, which will be good for gold, because people are going to be looking for greater protection.
Mike Maroney: Well, fantastic! Obviously, we would love to see everyone prepare and diversify with both gold and silver. If we're going to have a lot of big developments, hopefully, we'll have an opportunity to see some clients make some big profits. But, Jeff, it's been great talking with you this year and look forward to doing it again next year. Have a wonderful Holiday and a Happy New Year!