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Jeffrey Christian: Gold and Inflation

Tom welcomes back Jeffrey Christian Managing Partner of the CPM Group to discuss the economy and the gold market.

Jeffrey discusses his recent presentation at the Silver Symposium and how his opinions differ. He notes that all currencies are fiat and that gold’s value is determined by fiat. Much in the same way that currencies are valued by national central banks.

He doesn’t believe that inflation is showing that strong of a signal. They are watching the bond and equity markets closely along with debt levels. There is a lot of bad things occurring politically and economically.

Real estate prices are often unsupported especially when contrasted with incomes. Back in 2004-2005 they watched the housing market pump and expressed concerns. During that period they had investors selling real estate and buying gold and they are beginning to see that behavior now.

He argues that gold doesn’t correlate well with low inflation rates. He is expecting a deflationary period coming over the next year.

Jeffrey discusses why central banks are more price sensitive to high gold prices. Bankers are more sensitive to overpriced assets whereas investors often pile in during price moves. Investors also have different time horizons while banks have longer-term expectations and are not necessarily looking to sell.

He discusses Canada’s thinking when it comes to not holding gold and why they instead prefer to back their currency with US Dollars.

Jeffrey discusses lithium, nickel, and manganese and their importance in electrification. Capital availability is a problem in this sector. So how additional mines will be built is unknown especially considering the expectations for future production of electric vehicles. There just isn’t enough of these metals around.

Lastly, he discusses peak oil theory and questions its credibility.

Time Stamp References:
0:00 – Introduction
0:54 – Symposium Presentation
5:17 – Markets & Bubbles
10:20 – Mortgage Crisis?
13:23 – Gold Vs. Inflation
18:06 – CPI Measurement
19:36 – Paul Volcker & Rates
23:26 – Central Banks & Gold
28:55 – Countries without Gold
33:22 – Turkey & Gold
36:16 – El Salvador & Bitcoin
37:06 – Commodity Supercycles
43:35 – Copper & Futures
45:00 – Battery Metals
50:08 – Green Energy & Gas
51:50 – Peak Oil Theory
53:15 – Wrap Up

Talking Points From This Episode

  • Gold and determining its value against fiat.
  • Real estate concerns and his thoughts on inflation.
  • Central banks’ time horizons and gold reserves.
  • Energy/battery metals and lack of capital in mining.

Guest Links
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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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