Tariffs, geopolitical troubles, and concerns over US-China trade wars have provided a short-term tailwind to gold as a risk hedge. Though it has yet to break out into a new bull market, CPM Group's Jeff Christian explained what they see taking place starting next year:
“We're seeing investment demand (for gold) rising because we see another financial crisis brewing on the horizon,” he said. “We're seeing stronger central bank buying. We're seeing a reduction in supply on the horizon, and then on top of that we have this investor movement that we're expecting will be stimulated by financial problems, maybe a recession in the United States, maybe more severe global political tension going forward.”
Jeffrey Christian is one of the most accurate precious metals experts in the world and has provided Financial Sense Newshour listeners with invaluable advice over the years. We recently got an update on his macro outlook on FS Insider. Here's a clip from that 30-minute interview...
Volatility Now, Higher Prices Later
When we spoke Christian in August of 2017, his thesis was that the metals market would show a volatile sideways trading range with slight improvement in 2018 and 2019, followed by an acceleration and possibly new highs in the 2020 to 2022 timeframe.
This view hasn’t changed much, Christian noted, despite the flurry over tariffs and political controversy. Gold traded around $1270 and $1300 in the fourth quarter of last year, and has been trading between $1,300 to $1,370 in a sideways band higher in the first part of this year compared to last. It will likely continue moving sideways for the second and third quarters of 2018, Christian said, and then possibly start to move higher in the fourth quarter.
Financial Crisis Coming Up, Chinese Demand Shifting
Trouble is brewing for global financial markets, Christian noted, and this plays into the long-term drivers for gold that Christian expects to see take hold from 2019 to 2020.
He’s concerned with the global economic and political outlook, and also the stability of global and regional financial markets. Christian expects gold and silver prices to rise sharply between now and 2024, probably to record prices by 2022 to 2024 for both gold and silver.
“One of the points that we keep making is that we may have a crystal ball, but it's a cloudy one,” he said. “The reality is that the nasty things that await the world could unfold at any given time. Our best guess is it takes a year or two more. But you know, things could change dramatically at any point. And when they change, gold and silver are going to move and move quickly.”