Driving Factors Behind The Sharp Rise And Drastic Decline Of Gold & Silver Prices, And What's Next.
Summary
TLDRJeffrey Christian of CPM Group discusses the recent fluctuations in the gold and silver markets, emphasizing the role of profit-taking by investors after significant price increases. He dispels rumors of market manipulation, highlighting the intellectual asymmetry and misinformation prevalent in these markets. Christian also addresses the lack of oil price spike following Iran's missile attack on Israel, attributing it to oil exporters' desire to avoid a recession and lower demand. He outlines CPM Group's historical and current recommendations on precious metals investments, noting their buy recommendations for gold since 2000 and silver since 2019, and cautions against relying on marketing reports that may mislead investors.
Takeaways
- 📈 The gold and silver markets have been moving higher since the beginning of March, with a particularly steep increase on the last Friday mentioned.
- 📉 Prices fell sharply after the increase due to widespread profit-taking from investors around the world, which is a common occurrence after sharp rises.
- 💰 There is a significant amount of misinformation in the precious metals markets, with over a billion dollars flowing into commodity index funds, which can lead to distorted market behavior.
- 🌐 The rise in precious metal prices was due to broad-based buying from investors globally, not just a single large investor or entity.
- ⏰ Many market participants take profits before the weekend, especially after periods of sharp price increases.
- 🇺🇸 The U.S. Treasury is not likely to be behind any price manipulation of gold and silver, as it holds a significant amount of gold and has no incentive to decrease its value.
- 🛢️ Oil prices did not spike after the missile attack on Saudi Arabia due to oil exporters not wanting to raise prices during a weakening global economy.
- 🔍 Major oil companies and the U.S. have interests in keeping oil prices stable and are unlikely to push for higher prices that could lead to a recession.
- ⛴ The presence of the U.S. Navy in the Persian Gulf protects oil tankers and has historically reduced risks, which is why oil prices did not rise during the mentioned conflict.
- 📚 CPM Group's research and recommendations on gold and silver are based on in-depth analysis and have been consistent over the years, with buy recommendations in place since 2019 for silver and around 2013-2014 for gold.
- ⏳ CPM Group is planning to release a silver yearbook with definitive statistics on supply, demand, and usage in solar panels, aiming to clear up misinformation about silver deficits and shortages.
Q & A
What is the main topic of discussion in the transcript?
-The main topic of discussion is the gold market, with some extent to the silver market, focusing on the factors behind the rise and fall in precious metals prices.
When did the gold and silver markets start moving higher according to the speaker?
-The gold and silver markets started moving higher since the beginning of March.
What was the speaker's view on the steep increase in gold and silver prices on the mentioned Friday?
-The speaker believes the steep increase was due to broad-based buying around the world by investors, and not because of any single large investor or institution.
Why did the speaker say that prices fell sharply on Friday?
-The prices fell sharply due to profit-taking by short-term investors, especially going into the weekend.
What does the speaker think about the misinformation circulating in the gold, silver, and platinum group metals markets?
-The speaker is concerned about the bad information and its effect on misleading investors, emphasizing the intellectual asymmetry and the vulnerability of these markets to misinformation.
What is the speaker's opinion on the idea that the US Treasury would be behind a price slam down in gold and silver?
-The speaker finds the idea incredulous, stating that the US Treasury has no rational reason to wish for lower gold prices and that it has more to gain from rising gold prices.
Why did the speaker say there was no spike in oil prices after the missile attack by Iran?
-The speaker explains that no oil exporter wants to raise oil prices at a time when the global economy is weakening, as it would lead to lower oil demand and probably lower oil prices in a recession.
What is the speaker's stance on the CPM group's intermediate term gold recommendations?
-The speaker states that CPM group has historically been correct about 68% of the time with their recommendations, and they have maintained a buy recommendation on gold since around 2013-2014.
What is the projected timeline for silver prices to rise according to the speaker?
-The speaker has been talking about silver rising to average well over $30 at some point in the years 2024, 2025, 2026.
Why does the speaker believe that platinum prices are low despite claims of a market deficit?
-The speaker asserts that the market is not in a deficit but has been in a surplus for most of the last half-century, which explains the lower platinum prices.
What is the speaker's advice regarding the use of free data from marketing reports on precious metals?
-The speaker advises caution, stating that if the free data suggests a deficit and higher prices, it may be marketing and not based on sound research.
What is the speaker's final message to the audience?
-The speaker encourages the audience to take care of themselves and others, and to contribute positively to the world, even in small ways like picking up garbage.
Outlines
📈 Precious Metals Market Dynamics and Investor Behavior
Jeffrey Christian discusses the recent fluctuations in the gold and silver markets, noting a rise since March followed by a steep increase and subsequent drop. He emphasizes the role of profit-taking by intelligent investors, a common occurrence historically. Christian also addresses misinformation in the market, the influx of new investors, and the secretive nature of these markets. He clarifies that the US Treasury is unlikely to be involved in price manipulation due to its significant gold holdings and the limited utility of gold in addressing fiscal issues.
🛢️ Oil Prices and Global Economic Factors
The absence of a spike in oil prices following the Iranian missile attack on Israel is attributed to the reluctance of oil exporters to raise prices during a weakening global economy. Christian explains that economic slowdowns lead to lower oil demand and prices, which are undesirable for oil exporters. He also touches on the geopolitical tensions involving Iran, Saudi Arabia, Pakistan, the United States, and Israel, and how these dynamics affect oil prices and market expectations.
💰 CPM Group's Gold and Silver Recommendations
Christian outlines CPM Group's historical and current recommendations on gold investments. He mentions their long-standing buy recommendation from November 2000 to January 2012, and a subsequent sell recommendation. He also discusses the premature buy recommendation issued around 2013-2014 and the current buy recommendation in place since then. Christian provides insights into silver's potential to reach over $30 in the coming years, based on supply and demand factors, and refutes some common misconceptions about deficits and shortages in the silver market.
📚 Upcoming CPM Group Publications and Market Misinformation
Christian announces the upcoming release of CPM Group's silver yearbook, which will provide definitive statistics on silver's supply and demand, including its use in solar panels. He also addresses the spread of misinformation about silver and platinum markets, emphasizing the need for accurate data. Christian advises investors to be cautious of marketing reports and to rely on solid research for investment decisions. He concludes with a reminder to take care of oneself and others, and to contribute positively to the world in any small way possible.
Mindmap
Keywords
💡Precious Metals
💡Profit Taking
💡Commodity Markets
💡Misinformation
💡Market Manipulation
💡U.S. Treasury
💡Oil Prices
💡Geopolitical Tensions
💡Investment Recommendations
💡Deficit and Surplus
💡CPM Group
Highlights
Gold and silver prices have been rising since the beginning of March, with a sharp increase last Friday followed by a drop on the same day.
There is a lot of misinformation circulating in the gold, silver and platinum group metals markets currently.
Past examples show gold prices often fall sharply after a rapid rise, due to widespread profit-taking, not a nefarious 'smackdown'.
Over $1 billion has flowed into commodity index funds in the past 1.5 months, chasing prices higher and contributing to misinformation.
Precious metals markets are intellectually asymmetric with little good information and a lot of misleading data.
The US Treasury has no rational reason to want lower gold prices and is not behind any 'slam down' of the market.
Oil prices did not spike after the missile attack on Israel due to weakening global economic growth and oil exporters' desire to avoid a recession.
Major oil companies and many in the oil exporting world do not want to see higher oil prices.
Iran views Saudi Arabia as its biggest enemy, followed by Pakistan, the US and Israel.
CPM Group has had a buy recommendation on gold since November 2000, except for a brief sell recommendation in 2011-2012.
CPM Group has had a buy recommendation on silver since 2019, expecting it to rise to over $30 an ounce in the next few years.
There is a lot of inaccurate information about silver and platinum being in deficit and shortages. The markets are not in deficit.
CPM Group will publish its Silver Yearbook on May 14 with definitive statistics on supply, demand, solar panel usage, inventories and investment demand.
Free data from some marketing sources claiming deficits and shortages is just advertising and should not be used for investment decisions.
CPM Group's gold recommendations since 1980 have been to not buy gold 68% of the time.
The US Navy's presence in the Persian Gulf to protect oil tankers actually caused oil prices to fall in the late 1980s.
Transcripts
good morning it's Jeffrey Christian of
CPM group it's 10:40 in the morning here
in New York on Tuesday the 16th of April
I want to talk about the gold market and
to some extent the silver market the
factors behind the rise and fall in
Precious Metals prices last week we've
seen these markets moving higher for
more than a month now really since the
beginning of March they've been moving
much sharply higher last Friday we had a
very uh steep increase in gold and
silver prices as well as copper platinum
and Palladium uh and then the prices
came off on Friday
afterno there's a lot of Hy going around
all of these markets and I'm afraid that
we're going to have to talk about it and
hopefully I'll talk about what the
future holds
to preface
we've spoken in the recent weeks about
past examples of how metal prices gold
specifically in the examples we used in
those videos often fall sharply after
they've risen sharply uh this is true
and it doesn't represent a nefarious
Smackdown it is widespread profit taking
from intelligent investors around the
world that was the case in January of
1980 in March of 2008 in September of
2011 and at other times and it still is
true we're seeing a lot of garbage
information circulating the gold silver
Platinum Group medals markets right now
they're getting hot Commodities uh
investors are pouring into a some
investors have never been involved in
Commodities others are very uh
opportunistic and they're coming into it
uh new new after being away from it for
12 years or so um and there's bad
information that's circulating we've
seen more than a billion dollars worth
of money go into commodity Intex funds
over the last month and a half chasing
these prices higher and in that
environment bad information comes I've
said it in the past I'll say it again
one of the things I like about the
precious metals markets and commodity
markets in general is their
intellectual asymmetry
there is very little good information
around it is very unevenly spread across
the market there is a tremendous amount
of
misinformation and what you would call
Mal information consciously misleading
people about what's going on these are
relatively secretive ill liquid markets
they are underregulation compared to
stocks and bond markets and uh
they are vulnerable to bad information
we're seeing bad information in Gold
Silver Platinum markets right now CPM
group likes to use these videos to talk
about what's really going on in the
market and what's in real research
unfortunately right now I think we're
being being distracted and have to be
distracted by some of this bad data
simply because it's misleading
investors so yes golden silver prices
Rose sharply they Rose particularly
sharply last Friday and then they came
down why did prices fall sharply there
are all kinds of people saying all kinds
of stuff oh the Prices rose on one big
investor and having finished his
investment he walked away it's one large
institution it's a whale it's blah blah
blah it's bunch of nonsense
Prices rose on broad-based buying around
the world by investors who looked at the
world the state of the world and said I
think I want to have more precious
metals and prices fell sharply on Friday
on profit taking and there were a lot of
shorter term investors who came into the
market just last week or over the last
several weeks who took profits going
into a
weekend the majority of Market
participants in gold and silver are
rational and they don't believe all the
Hoy that you hear so when they see
prices Spike higher on a day or several
weeks of sharply higher prices they take
Prof profits and they often take profits
going into a weekend just to lock it up
so when gold rose 20% over the course of
a couple weeks and silver rose 33% or
32% over the course of a couple weeks
the vast majority of shortterm investors
said this is a good time to lock in
profits either by selling my metal or
selling my futures or buying puts so you
saw a big surge in trading volume not
just in Precious Metals but in Copper
options as well and in a number of other
Commodities and it was many buyers and
sellers around the world it wasn't a
single entity and no one should believe
that it's just not true and as I said
there was a lot of unfounded Luma Monger
there's no slam down all the people with
no real knowledge of how the gold and
silver markets work how financial
markets work would even talk about such
nonsensical stuff even more
incredulous is the idea that the US
Treasury would be behind such a slam
down the treasury owned more gold than
anybody else on Earth
261 million ounces worth approximately
$620 billion at prices around current
levels even so the US Treasury
understands that gold has little
relative monetary utility to it Beyond
being a monetary
Reserve people who don't understand
Central Bank monetary Reserve policies
say why is it that the US Treasury holds
so much gold while all the other central
banks hold so much dollars 60% of
Foreign Exchange reserves held by
central banks are held in US dollars but
the US Treasury holds no dollars well
the US Treasury cannot hold US dollars
as foreign exchange because it's not
foreign exchange it's the US dollar
furthermore there are other regulations
that apply to the US Treasury not
earning interest uh and other factors
there uh other central banks hold the
dollars because it's the de facto
Reserve currency right now the treasury
has more to gain in Rising silver gold
prices than anybody else on
Earth it has no reason to wish for lower
gold
prices and it understands that gold has
limited
utility related to fiscal
imbalances that 620 billion dollars
worth of gold represents five months
worth of the US government's current
fiscal
deficit it's not going to solve the
fiscal deficit problem it's less than 2%
of the 34 billion trillion dollars in US
debt so that Gold's there
but it doesn't really necessarily help
it and there's absolutely no rational
reason for the US Treasury or bullon
banks for that exam uh matter to slam
down the
price you might find Traders on desks
spoofing the
market but you're not going to find a
grand slam down in prices and the US
Treasury of all people have the least
interest in seeing
that now another topic I wanted to talk
about was why there was no spike in oil
prices after the 13th of April Iran
barrage of missiles and drones into
Israel main reason is that no oil
exporter wants to raise oil prices at
this time the US the global economy
growth is weakening we are seeing two
quarters of virtually no growth if not
outright contraction in Germany in the
UK already uh industrial production
figures came out from the the FED
today um for the most recent month in
the United States at zero growth overall
and contractions in consumer goods and
in uh housing and other factors
fortunately there was a strong growth in
business equipment orders and production
which is good because that's a leading
indicator of other uh economic
activities but you've got an economy
globally that is slouching toward a
recession or much lower growth and oil
exporters don't want to see that because
they make money selling oil to an
industry that in a global economy that
is well let's say well
oil they would see lower oil demand and
probably lower oil prices in a recession
and they don't want that it additionally
many major oil companies are not friends
of Iran they would love to see Israel
defang it um it's just not going to
happen probably Iran for its part sees
itself as having four major
enemies its most important enemy in its
mind if you read foreign policy
information coming out of Iran not from
Western sources is Saudi Arabia Pakistan
is its second largest perceived enemy
the United States is the third partly
because we've supported Saudi Arabia for
80 years and Israel is the fourth and is
useful to Iran only as a propaganda tool
you know let's distract all of the
people in the Muslim world uh from what
governments Muslim Islamic governments
have done to them by having an external
enemy in the entity of Israel and the
United States so it's highly unlikely
that the major entities of the oil
exporting World want to see higher
prices and would push prices higher in
the late 1980s Iran and Iraq were at War
and at one point the Iraqi Air Force
started shooting missiles at Kuwaiti oil
tankers and other oil tanks tankers in
the Persian
Gulf they asked the kues asked the
United States to provide Naval
protection for their tankers there was a
long debate in Congress about whether we
should do this and ultimately they ref
flagged Kuwaiti tankers as US flag uh uh
registered ships and the US I believe it
was the seventh fleet sailed into the
Persian Gulf and is still there and is
still protecting the oil ways there when
the seventh fleet sailed into the
Persian Gulf people in Europe and the
United States expected the gold price to
rise sharply because this represented
the US Navy Getting In Harm's Way Visa
the war between Iran and
Iraq the oil price fell
sharply we call our clients in Kuwait
and the UAE and Saudi Arabia and we said
um can you explain this to us and they
said our problem is solv our risks have
just plunged it's now the US Navy's
problem it's the US Navy's risk the US
Navy is still there guarding those
waterways and it's going to be
interesting to see what they do because
Iran is showing signs of wanting to
disrupt the flow of tankers and other
ships through the Persian Gulf and the
Straits of horn
but for now they haven't succeeded
they've got the US Navy which has more
Firepower than all of the armies
combined in the world through history in
between it and Saudi
Arabia and it's going to
be interesting but it's probably
improbable or unlikely that you'll see
oil prices Spike higher except on a very
brief basis because of those problems
oil prices could Spike higher for other
reasons but not that now I wanted to end
with a couple question these are CPM
group's intermediate term gold
recommendations since
1980 1980 to 200000 back and forth about
68% of the time we said don't buy gold
don't be long gold from a two to threee
try uh price uh price expectation
perspective you should be sharting gold
in November
2000 we gave a speech when we launched
our gold yearbook which was called the
gold survey back then and we
said that we thought that for the next
several decades the economic financial
and political environment would be more
hostile than it was in
1979 when gold went from $190 to
$850 and we thought that gold prices
would spike way past 850 and stay higher
for
longer that 850 would look cheap in in
hindsight over the next several decades
we kept that buy recommendation in place
from November of 2000 into January 2nd
of
2012 we actually started telling our
clients to sell their gold in September
and October of 2011 but we issued a
formal printed published
uh sell recommendation in a report
precious metals advisory first one of of
2012 title a time to
sell we issued a buy recommendation
around 2013
2014 a little bit premature the price
moved sideways for five years uh but now
it's been rising and that by
recommendation is still in place and
these are all published so any troll who
wants to say that I'm a bear it's just a
liar and they're one of those people who
do something that I just don't
understand but it's very common they
speak about things that they clearly
don't know anything
about similarly with silver you know we
issued a buy recommendation for silver
in around
2001 we took it off in March now April
of
2011 and we put it back on around 2019
and we've had a buy recommendation on
Silver for
2019 and we've been talking about gold
and silver gold prices were rising to
new record highs in 2024 2020 uh five
for several years now and we've been
talking about silver rising to average
well over
$30 at some point in 2024 25 26 for
several years
now and by the way the record annual
average price because that's what we
project the a record annual average
price was around $35 per ounce in 2011
2012 so we're talking about silver
prices on an annual average basis
approaching their past record high we're
not talking about $100 silver I know
there are some people doing that but
it's not
us we will be coming out with our silver
year book on May 14th it will have
definitive statistics on Supply demand
how much silver actually being used in
solar panels as per told To Us by the
silver panel
manufacturers right um inventories
investment demand the supply demand
balance we'll probably do some reports
for our clients and maybe a video
between now and May 14th on the title of
the sharded Shamira because there's a
lot of garbage going around about silver
being in a deficit and running out of GL
above ground inventories and it's just
not
accurate and we may do a similar one on
Platinum because platinum's not in a
deficit people keep asking us how is it
that platinum prices can be so low if
the Market's in a persistent deficit and
the answer is I don't know because the
Market's not in a deficit thek Market
has been in a surplus for most of the
last half century and it continues to be
in a surplus and that Surplus explains
the lower platinum prices if you're
looking at free data that you get from
some marketing GLE in silver or gold or
platinum and they're telling you there's
a deficit and a shortage and the price
should be much higher you're looking at
marketing reports as the head of one of
the world's largest precious metals
refiners said to us years ago CPM group
sells research they sell
advertising if you want to base your
investment decisions on
Advertising that's your prerogative It's
a free country still take care we'll
talk to you on Friday in the meantime
take care of yourself take care of
people around you see what you can do
for the world even if it's just picking
up garbage on your way home that's
better than nothing take care
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