Jeff Christian: Long-Term Outlook for Precious Metals Very Bullish

Mon, Dec 21, 2020 - 9:19am

Jeff Christian, one of the most accurate strategists covering the precious metals space, says there are three long-term tailwinds for higher gold and silver prices and that they expect prices to accelerate even higher in the years ahead.

Here's what Christian had to say in a recent interview with FS Insider about their 2021 outlook and beyond (see 2020 Gold Spike Only the Beginning, Says Jeff Christian for audio).

2021 Gold Forecast

CPM Group provides extensive research and analysis on the commodity sector and is considered a global leader on the precious metals space. For 2021, they expect gold to be up another 10 percent on an annual average basis, Christian stated.

Beyond next year, he also sees gold prices heading higher, with an acceleration in price gains in the 2023 to 2025 timeframe.

Gold prices will continue to rise for several years, but the pace of increase may be a little bit slower in 2021 and 2022 before accelerating in 2023, 2024 and 2025.

“We're telling people not to be overly enthusiastic about a market that we nonetheless expect to rise 10 percent on an annual average basis,” Christian said. “This implies maybe a 20 percent increase from point to point, on a daily price basis. So our expectation is the gold price is going to continue to rise.”

Big Three Gold Drivers

There are three key factors driving investors to buy gold, and these are unlikely to end anytime soon, he believes.

The first and most important factor is the pandemic. Though we are likely going to get a viable vaccine in 2021, the problem is, many have said they simply will not take it.

Also, the vaccine rollout will take time, and if too few people receive it, we may still have a lot of problems related to the pandemic to deal with.

The economic environment also continues to present a challenge. We are going to see a recovery, which will likely look similar to the recoveries we saw after the 1990, 2000, and 2008 recessions. This equates to 2.5 to 2.7 percent real GDP growth on a quarterly average basis, Christian noted, over the next several quarters, which is relatively anemic. We also have high unemployment and massive fiscal deficits to deal with.

Lastly, political risks remain high. We’ve seen the rise of nationalism and nativism, and just plain obstinacy in the political environment, Christian noted. This is true all around the world.

This has signaled a decline in international cooperation overall, that continues to be a problem despite the change in the U.S. administration.

“The pandemic is going to continue,” Christian said. “We have massive economic problems that are going to continue. We’re going to need more than the $900 billion stimulus that they're talking about in Congress. That's probably a third of what we're going to need in terms of fiscal stimulus to support the economy over the course of 2021.”

Silver Playing Catch-Up

Similarly, Christian sees silver playing catch-up to gold. Though it has lagged behind for a variety of reasons, CPM Group believes it will probably rise to record levels over the next 3 to 5 years.

It may not catch up completely, but it should perform very strongly for a combination of reasons, including investors buying silver as a safe haven and a portfolio diversifier and a wealth diversifier, and because silver demand in solar panels and other green technologies and electronics will continue to rise.

“We have a list of things that are going wrong in the world that are positive for gold...and the list has gotten too big to show up on a single chart. … That should cause investors to say, ‘I should have more of my money in gold', and I don't see that changing for the world anytime soon.”

To listen to our full-length interview with Jeff Christian, click here. If you're not already a subscriber to our FS Insider podcast where we interview book authors, strategists and industry experts from across the globe 3 days/week on all things economics, finance and markets...

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Written by Ethan D. Mizer

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