Gold news

 [Music] [Music] I'm Charlotte McLoud with investing news.com and here today with me is Jeffrey Christian managing partner and CPM group thank you so much for being here good to catch up with you always a pleasure you always have good questions oh good okay I hope I hope they will measure up today I think where I wanted to start so you told me at the beginning of last year that usually you'll assign a word or phrase to the coming year so for 2024 do you do you have wir yeah we're calling 2024 another year of

Living Dangerously uh we had used the term a Year of Living Dangerously uh I think it was in 2008 uh when things were wild wild uh and we look at 2024 2025 and has a similar period of uncertainty okay that that is very interesting maybe a little bit alarming for people do you see any other parallels to 2008 or is it just we're living dangerously or do you also see parallels between the two well it's interesting because in 2008 there were actually a lot of political factors that were leading to the financial crisis the

global recession uh the Great Recession the global financial crisis and and you know the the US invasion of Iraq uh which led to a sharp and steady increase in OPEC oil prices and people didn't realize it because OPEC did what shik yamani had told them to do 20 years earlier which was to slowly and steadily increase the price and to make sure that there were Supply disruptions you know as long as people don't have to get into uh lines at the gas station they'll pay whatever you charge them for the

gasoline and they did that from 2003 when we attacked IR Iraq up until 2008 uh so there were political things but they were not as prominent and obvious as they are now and I think that one of the big parallels is that you're looking at a year in 2024 where politics will be much more important in this investors deciding whether to buy or sell gold and Sila right and as we were talking before we turn the camera on it's an election year in 2024 which I'm sure is related to what you're

talking about there so what should we what should we be paying attention to when it comes to markets and gold perhaps in an election year it's really it you should be paying attention to everything you know unfortunately politics are are harder to project Jack and all uh but the and the reality is it's an election year in more countries more than half of the countries in the world so it's a very important election year obviously there's a lot of attention on the US economy and the US

election you have these two geriatric people uh who are wul unpopular uh and deeply flawed as the likely uh candidates and you know they're or you can honestly say that democracy is in the balance in the United States but you can see similar patterns in various European countries not so much in the UK but there are big issues there are more people in the UK who wish they had not left the EU then are glad they did Ireland Canada China Russia has an election I think next month uh it's going to be a puppet election but it is

uh something there and then a host of other countries throughout Asia Africa Latin America so it's a political El year it's an election year and in many of these countries you have a rise of nationalism you have a rise of nativism you have a rise of tribalism and you have a rise in economic nationalism you have all sorts of regulations that are being imposed around the world that are causing static in the overall economy as well as people's lives and and that opens up the opportunity for major economic problems

and financial Market problems where you have regulations and and all of a sudden the banks say I'm sorry but that regulation is too stringent I can't roll legitimate business loans forward you know we've seen this in the past and there are legislation in Canada the United States and Europe that have that potential unforeseen consequence it's not unforeseen but it's unintended you know and and so I think the political environment is going to be very important and it's going to have a major

impact on the economy and the economic Trends uh we're al already seeing weakening economic uh indicators in a number of countries uh and it's going to have a lot to do with the way investors look at the world and say how comfortable am I being in stocks and and corporate bonds and municipal bonds and how much gold and silver should I have in my portfolio and so when you talk about investors looking at these circumstances and starting to make those evaluations you're talking about kind of

your everyday retail investors may be becoming more interested in gold and silver this coming year well yes it's not just retail investors also institutional investors and family offices there's been an enormous rise in the amount of assets under management in the private Equity sector uh and and so it's really across the Spectrum and in terms of the timing our expectation is that a lot of this concern increases in the third and fourth quarters so it's the second half of this year we think

the first half of this year could be stringent for investment demand for gold and silver continuing what we saw in 20122 and 2023 um but that by the Third quarter and fourth quarter there may be a radical shift in the political environment political expectations and concerns and that could be much more visible having a much more visible negative effect on the economy and thus financial markets so we think that the second half of 2024 might see a heightening of this investor interest in gold and silver you know we've seen some

decline in Gold demand over the last year uh we saw a tremendous de decline in silver investment Demand on a net basis last year and we're g we're seeing an acceleration of that investor disinterest so far this year in the first two months okay so yeah as you as you explained that it makes sense how this could be really an important determining factor for people when they look at do they want to hold gold and silver for golden silver what what else is on your list what's what's next on

the list in terms of importance for gold and silver impactful factors this year well the major factor is investment demand and our expectation is that the second half will see stronger demand based on all those economic things I was just talking about second thing is central banks now you saw central banks buying uh about 12 million ounces of gold last year uh on a net basis uh and on a gross basis they bought about 16 million ounces but 7 million ounces of that nearly half of it was China People's Bank of China and they were

buying metal that was building up in the Chinese market because investors and others didn't want it so the investors were selling gold in China for a significant part of 2022 and 2023 and you know China the government has a policy that gold in China stays in China so it was building up over the Chinese market and the People's Bank of China which had stopped buying gold in June June or July of 2019 when the price went over 1350 said okay we'll start buying so they bought about 78 million ounces last year and that was

all in the domestic Market that buying is behind the market we expect the PBC to continue to buy gold but at a much lower rate going forward then on the gross sales side you had about 5 million ounces of sales last year four or five million ounces of sales but that was mostly usbekistan Kazakhstan and turkey and they sold gold in the first four months of last year because they needed foreign exchange because the Imports into those countries were so high and the Imports into those countries were

high because they're all acting as in uh interos for Russia so you can't ship stuff into Russia but you could send send it to usbekistan for Becki to demand and then the US Becki sell it to Russia and and that business of sanction busting is very lucrative so there was a buildup of personal wealth in usbekistan Kazakhstan and turkey and so you had an increase in demand for imported goods in those three countries they ran out of foreign exch or they ran low on Foreign Exchange so they sold a lot of gold in

the first four months of last year that probably won't repeat this year so we're looking at central banks that was saying how much gold will central banks buy this year well they bought on a gross basis 16 million ounces last year it may be closer to 10 million ounces but they the sales that were 4 million ounces last year probably will be much smaller maybe 2 million ounces so maybe it's 8 to 12 million Al again this year in net central banks that's the next thing then you have mine production which is being

hit by this resource nationalism environmental things uh and the strange nationalism like for you know so M production in Mexico is off uh not but you know it's a it's an election year and amlo has said that he wants to ban open fit mining that would be devastating to the mining industry in Mexico it's not going to happen but the fact that they're talking about it causes problems for Capital formation in the mining business I'm curious where where you put the FED on the list of all all the

factors for gold this year where does the FED fall in terms of importance and and what it's going to be doing monetary policy follows Cisco policy the problems are not in the monetary policy side it's in the fiscal policy side you know and politicians love to have consumers blame the FED for the problems politicians have created you know we see this in the gold market where you know in the 90s uh bullion Banks were doing a lot of things and people started blaming the mining companies for doing it the buan banks

would say yeah that's terrible yeah know it's like I'll gladly let you blame other people for my misfeasance or my bad behavior and you're seeing that so when we're looking at the economic environment we look at real GDP supply and demand what's the real supply of goods and services what's the real demand Trends in goods and services then we look at fiscal policy which factors into that and the monetary policy is the tertiary Factor because the the monetary authorities whether it's the fed or the

Bank of Canada or anybody else they sort of have to in an ideal world they'd be able to do monetary policy independent of what's going on in the economy but in the reality is they have to react to the bad fiscal policies they have to support the bad fiscal policies because their job is to try to keep the economy stable even in an environment where the government is behaving very poorly yes I remember I remember you've made that distinction for us before but what is really important there I also I

wanted to check in on how you're feeling about the recession question when we had our previous conversation back in July you were seeing potential for a significant recession in 2024 or 2025 but then you you revised your expectations I believe every quarter so how how is it looking to you now yeah we Revis our long-term 10-year projection e ionically gold silver other metals Platinum drip pedals Molly yeah copper lensing you know we revise our quarterly projections at least quarterly uh our

10year projections uh for for Metals some go out 15 some go out 25 years uh but we revise those as well as our economic we have a recession that is more shallow now than we were expecting two years ago you know the strength in the economy there are a lot of strengths of the economies uh suggest to us that perhaps the recession will be milder than we had expected and we had already been saying that in the second and third quarters of last year uh and it more likely to emerge in the second half of

this year into 2025 than in the first half of this year which is reflected in what I just say about investor demand exactly okay and I want to touch on gold price in 2024 and look at where you see it going this coming year we're looking for record gold prices you know I this morning as before we speaking the gold price was over 2100 again we're looking for a significant in our mind increase in gold prices so we're looking at an average price of maybe 2050 up from 1950 last year it's a 6% 8% increase which is

very significant on an annual average basis and that's what's important to producers and Jewelers and and really should be for investors on an intraday basis we're looking for even higher prices this year obviously to get to that that level and then continuing to rise in 2025 as the economic and political environment work woring do you have your your 25 2025 projections yet or is that that will come later we have them uh I tend not to say them in public because we charge a lot of money for it

but we're looking for higher prices in 2025 than we are in 2024 okay fair enough okay so we'll we'll leave gold there for now I also want to make sure that we touch on Silver because you just had your latest silver facts and Fantasies event I believe it's now annual and if people missed it they can start to see it online you're posting it in installments so I I saw you had over 100 questions from people and I'm I'm sure you answered many of them but probably not all well I was wondering

what what themes did you see in those questions what do people want to know the most that's a tough question to answer I mean that was eight five days ago but there were a lot of questions about where we thought the price of silver was going to go there were questions about is mine production uh going to be sufficient to meet fabrication demand there were questions about solar power because there's a lot of misinformation about the growth the solar solar power solar panels using silver uh it was up sharply last year

it's going to continue to grow but there are some wild overestimates as to how fast it will grow and how big it is so there were a lot of questions about fabrication demand specifically silver used in solar panel will there be enough silver there are people who are incorrectly saying that yo it's industrial demand that will matter in determining the price of silver going forward and not investment demand and you know we I've been in the business for almost 50 years now next year it'll

be 50 years since I wrote my first commodity piece and I have seen in periods of quiet investment demand for silver people say oh investment demand's unimportant to the silver price it's industrial demand I've seen that through several cycles and it's always been wrong in the past it'll be wrong in the future you but solar panels how much silver is above ground people don't understand the the questions of above ground reserves and resources how much silver is up there and you know some

people will call it available inventories and then you'll have people say Well mine's not available it's like well it is at some price every you know and but we don't we talk about above ground inventories and yeah some of that stuff never gets sold uh but some of it does you know and and so above ground inventory is how much is out there what prices do you expect it to come back will we have to live off of those above ground inventories to me solar panel demand there that was probably the major

set of questions with so and then again people also continue to not understand the difference between minable reserves and minable resources and so it's like well I look at reserves and there's only 5 years worth of reserves left in Mexico it's like well you know Mexico's been a major producer of silver for 600 years and theyve never had more than five or 10 years worth of Reserve because the Mexican producers have no economic interest to undertake the expensive cost of really drilling out their resources

and proving them up into be reserves as long as you have 5 or 10 years and you understand the geology of your resources that's that's fine and that's true in Mexico in Peru in China Ecuador Bolivia and so as a result we don't necessarily see reserves Rising um although in the last few weeks you've seen several companies report their financials including increased reserves last year uh partly because of the higher silver price resources become M economically minable and they become

reserves and partly because they're drilling stuff out and finally it so it's there and there's a vast misunderstanding as to what minable reserves really are so people look at this and they say oh there's only five years worth of Reserve flat it's like you know and then the Mexican miners will say yes we're up to five years with the reserves because we've never had that much okay okay it's it's interesting for me to hear just the themes that emerge and and learn what

people want to know I think I will I'll follow up by asking what your projections for the silver price are in in 2024 we're looking for the silver price to range between say $22 or2 2022 is a low and maybe 2728 as a high you know and we're at 2365 this morning uh but we've been trading most of the time over the last 18 months I think between say 21 and 25 24 and we think that's probably sort of where you're going to be but then again as with gold we do think that the price picked up toward

the end of this year we have seen incredibly low investment demand in silver last year following into the first two months of this year and we're kind of worried about that some of our clients are thinking that the price could go below $20 maybe to 18 we're not convinced about that uh but you know we've seen very low investment demand for silver we've seen a lot of investors selling their silver companies you know retail uh suppliers who were saying oh it can't keep up inventories all of a sudden they

have enormous inventories that they'll sell at Bargain Basement prices you know and now they're complaining because the margins have come down because the margins were inflated for several years by strong demand uh so you know we do think that investment demand will pick up maybe in the fourth quarter and will start seeing silver prices rising at that point okay good to go good to go over that and before we wrap up I I think we've got a good overview of gold and silver I'd love to come back to some

of these things in Greater detail later but for now any any final thoughts you would share with investors as we head forward into the year yeah you know well our investment process is that we advise clients on and it's been this way forever yeah since the 80s is you should have some some portion of your wealth should be in physical gold and silver that you own as an insurance policy against other assets DET teror you know uh but not all of it and then you should have some physical gold and silver and

some mining shares spread across the mining sector uh that are longer term investments you know you have a a three to five year Horizon on that you will sell when you see prices high and then you will buy them back when the prices fall back and then you should have some that is much more shortterm Investments like and that may include mining shares and ETFs but it also includes Futures forwards and options and that stuff you should you can trade back and forth uh and that's really the best way to invest

in gold and silver we see a lot of older people you know 40 to 65 70 um who understand that but there are a lot of younger investors who only focus on that short-term trading stuff and we're starting to see now as people who were gruesomely overpaid in the tech sector being laid off that they're starting to say well maybe I should have some money score away and one of the things that we're finding is a number of 20 somethings and 30 somethings who have that money socked away but it either in

cash earning nothing or in the stock market and they haven't Diversified their long-term portfolio and unfortunately I don't see anybody other than CPM you know the world go conso the world Platinum investment Council I don't see any organization in the mining sector doing the groundwork saying hey yo Young Folks look at the state of the world this is another year of Living Dangerously and you should have stock some of that metal money that's in record levels of stock market you should have put some of that away

and it's really weird because if you talk to a lot of these investors and say ah stock market you know I must be down on my my stock position you say no look at it and they oh my God you know I I've never had this much money in the stock market right yeah the stock market is very high and this is a good time to cycle some of those profits into precious metals long-term presses Metals as a long-term Insurance portfolio diversifier and that's really what the message I would leave with the investor

okay I think that's a really that's a very interesting place to wrap it up that's another topic I might like to come back and ask you more about in the future but for now thank you very much for for stopping by to talk about gold and silver well thanks for having me and yeah let's not make it seven months again I know I know yes okay once again I'm Charlotte McLoud with investing news.com and this is Jeffrey Christian with CPM Brew [Music]