Long-term investors replacing "disenchanted" holders and traders, says CPM Group's chief...
JEFFREY CHRISTIAN, managing director of the CPM Group, author of Commodities Rising, and a leading expert on silver and gold markets worldwide, was my guest last week on New York Markets Live.
Considered one of the United States' most knowledgeable experts on precious metals markets, commodities in general, and financial engineering using options for hedging and investing purposes, Jeffrey Christian told me about how he sees the current buying and selling pressures on gold and silver, plus the investment patterns of 2013 going into 2014.
"Last year there were the disenchanted long-term investors who didn't see the collapse of the financial markets," he explained. "There were also disenchanted short-term investors as the price fell, who drove down the price of gold further."
Other longer-term investors said "maybe the world's not going to collapse, we won't have hyper inflation, but we still have economic problems we're facing globally and in individual countries," Jeff Christian went on – and "they have been buying.
"We've seen this increase in long-term investor demand last year which has continued this year."
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CPM Group is an independent commodities research firm that advises governments, companies and individual investors on various aspects of the commodities markets.
"Our expectation," Jeffrey Christian told me last week, "is that the price of gold will trade sideways until September-October. [Then] you will see the gold price rise more forcefully, which will reflect long-term investors buying large amounts."
Silver of course is a different but closely related market to gold. So where does Jeff Christian see the price of silver heading, and what should people invested in silver be concerned with?
"There are some major structural shifts in the nature of demand for silver right now," said Christian. "While short-term investors were liquidating their gold ETF positions last year, they basically held on to their silver positions. Silver has underperformed relative to gold because gold is a much more fundamental and global financial asset."
Within the silver market itself, "Photovoltaic is consuming large amounts of silver. There's been a massive reduction in the cost of solar power. Now, solar power is much more competitive to conventional energy sources. Our expectation is that we'll see 20-30 million ounces of new capacity of silver per year for the next four years."
But such industrial demand alone can't create a bull market in prices, says CPM's Christian. "The silver market is dependent on investors buying historically large amounts of silver to keep the price high."
Hear the full 30-minute interview here...
