Mike Maroney Interviews CPM Group's Jeff Christian on September 2018
Mike Maroney: Good afternoon! My name is Mike Maroney and I'm talking today with Jeffrey Christian, the Managing Director of the CPM Group. Jeffrey, a lot of people right now are looking at the market and they feel that the trade war is creating uncertainty, but it seems that this uncertainty is creating dollar strength and precious metals weakness. Do you expect that to continue into the near future?
Jeffrey Christian: In the near future it continues, but at some point, I flip... it flips, you know. Clearly, the trade wars have caused a lot of investors to flee to the dollar and we think that that's going to reverse at some point, simply because the dollar has gotten to a certain point and also people start diversifying away from it. So, our expectation is that at some point in the next month or two, what you're going to see is a clear topping out of the dollar, and a clear bottoming out of gold prices, and a reversal of both trends.
Mike Maroney: Now, gold, if you look back to June... the middle of June, just a few months back, gold was up around $1,360, silver was in the $17.40 - $17.50 range. We've seen silver sell off to the tune of about $3.50. Where gold has been a little bit stronger. You were talking a little bit about the fact that silver is more industrial in nature. Could you explain that to our viewers?
Jeffrey Christian: If you look at gold and you sort of do studies as to where the gold prices... what the formation of gold prices are, gold is clearly a financial asset. It trades like the dollar. It trades like treasury bills and it's much more of a quasi-money. Silver has some of that, but a lot more silver is used in manufactured products: electronics, a range of electronics, solar panels, jewelry, silverware, ball bearings, mirrors, you name it. Silver is used all over those things. So, silver, like platinum and palladium are more industrial metals than they are... than as gold. We often say that silver is a little bit schizophrenic, because sometimes it behaves like an industrial commodity and sometimes it behaves like a financial asset, but I think that the weakness... the greater weakness you've seen in silver, platinum, and palladium relative to gold over the last two months clearly reflects the concern that investors have that the trade wars are going to hurt demand for these metals, and manufactured products, and fabricated products. Whereas, gold is still seen as a financial safe haven and even while people are focusing on putting money into the dollar, they are continuing to view gold as a safe haven.
Mike Maroney: Well, the good thing about the recent action is it's creating a strong buying opportunity for silver. Do you have an expected range for silver and gold over the next... oh, three to four months?
Jeffrey Christian: Yeah, starting with silver... well, let's start with gold. Our view is that the price probably bottomed out around $1,166.00 two weeks ago, three weeks ago. It's been trading above $1,180.00 since that. We had thought that $1,180.00 might be the base. We still think that it is. We think it's going to go up and test $1,220.00, there's a lot of resistance technically at $1,220.00. There are a lot of people who have been shorting all commodities, including the precious metals, but we think once it breaks above $1,220.00, which we think it probably will do in late September, early October. Then it starts making a run. Our expectation is that it breaks and starts testing $1,280.00 by late October, early November, with higher prices later on. So, that's our range for the next few months with gold-- thinking it's bottoming out around current levels and we think it moves higher in a steady fashion over the next two to three months.
With silver, we're looking at a very weak September and then we're looking at a pop back in October and November. So, if we're looking at the price, we have been saying that we thought the price of silver could get down to $13.60, $13.66 or so, and it's almost there now. Our expectation is that September sees a weak silver price and then the price pops back up into that $15 - $16 range October, November, and possibly by the end of the year it's back where we were, which is $16 - $17.50.