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Jeffrey Christian: Central Bank Gold Buying and Recession Outlook

Tom welcomes back Jeffrey Christian Managing Partner of CPM Group. Jeffrey is an expert on the gold and silver markets.

Jeff explains that in 2000, they issued a buy recommendation on gold at around $285, due to the political and economic environment that was going to last for decades. He then outlines the different drivers for gold and silver in different market environments, as well as the optimal level of metals in a portfolio. He examines the idea that China holds 40,000 tons of gold in its reserves, and why China does not want to have the reserve currency of the world.

Mr. Christian also explains why the mining industry has a lower beta compared to the price of the underlying metal. He states that due to a lack of investor interest in the sector, along with the rise of stock index funds and ETFs, institutional investors have been cutting costs and reducing their involvement in individual stock trading. This has caused a contraction in the stock market, reducing the buy side’s ability to support research. He also explains the red, green, blue bubble chart that takes into account many different factors that CPM puts together, as well as the potential for hydrogen engines in the future and the importance of specialty metals, such as tantalum, in the electronics industry.

Time Stamp References:
0:00 – Introduction
0:40 – Commodity Research
5:24 – Factors Driving Metals
10:07 – Gold & Silver Differences
11:44 – An Optimal Portfolio
14:03 – Bad Data & Conjecture?
20:09 – Gold & China
24:56 – Gold Reserves & Sources
36:15 – China & Reserve Currency
39:00 – BRICS Effects & Dollars
44:40 – Mining Equities & Beta
49:30 – Inflation & the Media
55:18 – CPM Recession Outlook
57:37 – CPM RGB Bubble Chart
59:01 – A Year of Transition
1:02:27 – Metals & Energy Scenarios
1:05:10 – Fossil Fuel Future
1:07:16 – Platinum & ICE’s
1:10:14 – Tantalum Uses & Supply
1:12:36 – Wrap Up

Talking Points From This Episode

  • The drivers of gold and silver in the commodities market, as well as the optimal level of metals in a portfolio.
  • The asymmetry of the gold and silver markets, and how bad data and misinformation can lead to incorrect decisions.
  • China’s gold industry and why they don’t want to be the reserve currency of the world.
  • Uses for the specialty metal tantalum and the importance of Australia becoming clean source of the metal.

Guest Links
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YouTube Link:

Jeffrey Christian is the Managing Partner of the CPM Group. He is considered one of the most knowledgeable experts on precious metals markets, commodities in general, and financial engineering, using options for hedging and investing purposes. He is the author of Commodities Rising 2006.

Jeffrey Christian has been a prominent analyst and advisor on precious metals and commodities markets since the 1970s, with work spanning precious metals, energy markets, base metals, agricultural markets, and economic analysis. The company was founded in 1986, spinning off the Commodities Research Group from Goldman, Sachs & Co and its commodities trading arm, J. Aron & Company.

He has advised many of the world’s largest corporations and institutional investors on managing their commodities price and market exposures and providing advisory services to the World Bank, United Nations, International Monetary Fund, and numerous governments.

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