Jeffrey Christian: Gold, Silver, PGMs — My Summer Price Outlook

[00:00:04]I'm Charlotte Mloud with investingnews.com and here today with me is Jeffrey Christian, managing partner at CPM Group. Thank you so much for being here. Great to have you as always.

[00:00:15]>> As always, it's good to talk to you, Charlotte. You have some of the better questions uh that get asked of us. Yeah.

[00:00:23]Well, I always try my best and I think today is a a great time to be speaking with you giving everything that's going on with gold and silver and the rest of the precious metals. Gold was having a price decline last week and I know that investors had a lot of questions about what was causing that. So, from your perspective, what was behind that fall in the gold price last week that we saw?

[00:00:45]A lot of information is secret in the precious metals markets, you know, spot purchases and sales. But you get the ETF data, and if you look at the ETF data, you saw gold ETF holders liquidate 1.6 million ounces of gold between the middle of May and late last week. Uh, and that's really was the major factor.

[00:01:10]So then you can say, well, why were they selling? And you know, I hate to say it, but one of the reasons they were selling is that the price has been falling since it reached its peak in February. And a lot of these ETF investors are not traditional buy and hold physical gold and silver buyers. They are more opportunistic. You know, they saw the gold price rising after August through January, and they bought ETFs. They bought an enormous amount of ETFs in that five-month period. Uh and then since February, they've been just selling and they accelerated their their sales pace over the last two weeks. You know, partly because the price was falling, partly because the stock market was rising, partly because the economy looked better than they had expected it to.

[00:02:01]>> Okay, I think that that gives us a good idea of what was going on last week. And as we were having that fall in the gold price, it was generating I think a lot of discussions on whether we have seen the bottom for gold. So I'm curious to get your thoughts on that. Do you think the bottom is in or or can gold fall further from where we saw last week?

[00:02:22]>> The price can fall further from where it is. I mean, we've been saying that we thought that the price would consolidate in in a very volatile range between April and August through August and and the range so far has been like 4,100 $4,65 last week and say $4,900.

[00:02:44]the potential for it to spike down and actually touch 4,000 or even go down to 3,800 which is where a lot of technical people are looking. I think that's a reasonable uh bottom but you know our view is that the price moves sideways in a very volatile fashion for the next two and a half months. Whether it gets below 4,000 I don't know if that's going to happen.

[00:03:09]uh you know it uh these are very volatile markets and very volatile and economically uncertain times and investors are flopping around back and forth.

[00:03:20]>> Yeah, I remember when we spoke in March, we talked about that trading sideways, but the price will be volatile. So, it sounds like that's what we're going to be seeing at least for the summer. What would you say is the the upper limit on that range? We've talked about the the lower, but what would be the upper?

[00:03:38]Somewhere between 4,800 and 5,000 I think is the range for the next couple months. We do think that it goes higher after August, you know, into the final four months of this year.

[00:03:52]>> Okay. And we'll we'll get into that a little bit later. I wanted to speak about gold price activity that we're seeing today because after last week's decline, this week we are we're seeing a rebound. We're talking on June 15th, so it's Monday, and it's we've had this this news of of a potential peace deal between Iran and the US. We'll see how that plays out. But to what extent do you think that that price rise that we're seeing is related to that? Is it is it highly correlated to that or there are other factors at play?

[00:04:21]>> I've been shocked uh over the last several weeks because, you know, President Trump has continually said, "Oh, we're going to have a treat, you know, we're going to have peace." I mean he started you know he attacked on February 28th and on March 1st he said well you know this this will be over in a day or two and March April May half of June for three and a half months he keeps saying oh we're we're we're on the threshold of a deal you know we talking now and the Iranians say we're not talking and we're nowhere near a deal and even if you look at the the current deal you know but I've been shocked at the extent to which precious metals and market partic participants and others in equity and bond markets have paid any attention to what this guy says. I mean, he's a serial liar and he's a serial dishonest about this. And yet, you know, he was saying last week, oh yeah, you know, we're a couple days away from having a a peace agreement. And I think there I know people who were selling based on that idea. And we were saying, you know, you've got to be kidding.

[00:05:31]You're you're selling based on what this guy is saying about this. Now, if you look at the present, what they've got is a memorandum of understanding which says, "Hey, we're going to have uh 60 days of further ceasefire during which time we'll resolve everything else."

[00:05:49]Now, you know, I was listening to the details yesterday and I turned to my wife. I said, "Are these guys that naive?"

[00:05:56]Because in 60 days, the Iranians are not going to agree to give up their uranium.

[00:06:02]They're not going to give up agree.

[00:06:04]They're not going to agree to give up their defense, including nuclear power uh weaponry pos potential, you know, and the United States is not going to give up on its side. So in 60 days, you know, Trump is going to have to resort to his bluster again because this is not going to be resolved in 60 days.

[00:06:26]But what will happen is in 60 days you're going to be in the middle of August, which uh means that you're going to be, you know, 8 10 weeks away from the midterm elections. So, he's going to have a tougher domestic political environment in in in 60 days than he has now. And he's set himself up for that.

[00:06:53]So, I'm surprised and shocked that people have actually bought and sold stocks, bonds, currencies, and precious metals based on him saying, "Oh, we're two days away from a treaty." Uh and I think that the memorandum of understanding that is being worked on this week, although he said it's been signed, you know, just he's in Paris now for the G7 or in uh Evian for the G7 and he said today that it's been signed. It hasn't been signed. It hasn't even been written yet. Um and um you know, he's just setting himself up for for for further chaos and uncertainty.

[00:07:35]Yeah, I almost I almost hesitate to bring it up because there is so much uncertainty, but I think it's worth talking about and it's interesting to see your surprise at how people have reacted to the Iran war in terms of gold. I think among our audience, I've seen a lot of questions about why isn't the gold price higher when we're in this situation of conflict and geopolitical turmoil. So, do you think that also ties into what you've been noticing about how people are reacting?

[00:08:04]Well, yeah. And you know, we're in we're in a a tough period now. And one of the things that we pay a lot of attention to is the way gold and silver investors buy and drive the price higher in times of severe economic and political problems.

[00:08:21]And you'll see, you saw this in the depression, you saw it in World War II, and I think you're seeing it now where, you know, there's an initial rush to buy gold and silver and the prices go up high, and then there's a pause when it's not that the chaos and risks and uncertainties and anxieties are normalized, but they are to some extent.

[00:08:45]I guess that yeah that's I don't want to use that term because it's not like a long-term normalization but there's a pause or a plateau where people say okay I've got my gold and silver now let's see what happens and that's sort of where we are right now in as far as we can tell we're in a position where people have been buying a lot of gold and silver uh in concerns about all of the risks not just Iran uh but all of the risks and uncertainties that the world's facing u The economy is showing up a little bit stronger than people thought. Employment data is showing up stronger. Unfortunately, inflation is also pointing toward higher prices um uh which is suggesting higher interest rates which is sort of a headwind to some extent uh for gold and silver. So, you know, you're sort of in this this this pause period right now. And again, you know, we think that pause period could last for a couple months now before we see um another wave of investor anxiety pushing prices higher.

[00:09:51]>> This is going in a direction I wanted to ask you about, which is that level of global risk and uncertainty. When we spoke in March, you were talking about how at a global level, I believe it was it was higher than we had seen since Pearl Harbor. I wonder so have you seen the global level of risk increase or decreased since then? I know you said that people are are kind of in a holding pattern but how does it look?

[00:10:16]>> I think um I'm not sure that it's increased but I don't think it's decreased. I think in reality what one of the things that we've seen since March is that uh some of the federal judges down from the Supreme Court have taken a more legalistic approach toward a lot of the things that Trump has been doing. So you've seen a lot of things that the Trump people have been doing being rejected by the courts and being reversed by the courts. you're seeing perhaps a little bit more effective counter effect on a political level, including some Republican senators and Congress people who feel that cowtowing and and and and falling behind with Trump could cost them their jobs and career, political careers. Um, and they'd have to become lobbyists u uh if they lose. So you're seeing a little bit more political fight back. You're seeing a little bit more again that normalization.

[00:11:20]You know, uh if you go back to March, there was a tremendous amount of activity uh about ICE. ICE was being very militant. They were shooting people. They were grabbing families. You know, they at one point they actually imprisoned a two-month old baby, you suspected terrorist. uh and there was increased opposition to ICE and DHS. If you go forward to today, ICE has backed off. There's less visible opposition.

[00:11:53]You know, the head of uh Homeland Security is gone. They brought in somebody else who's trying to sort of backpedal things. They're selling off some of the planes that Christy Nomad bought. you know, they're clo they're trying to get out of contracts for these these warehouses where they're going to try to put 10,000 or a thousand people in in a place with one bathroom. Um, you know, so you're seeing some push back.

[00:12:21]It's not that the risks have deteriorated or red been reduced. It's that you're in this stasis period.

[00:12:29]You've seen the initial thrust and now you're in the trenches waiting for the next push forward. And the next push forward will come and it will probably come before the election, you know, and it's going to include a lot of uh efforts to interfere with the elections to have federal agents at the polling places with guns and to have federal agents seizing from the states. the states have the legal right to the ballots, but the federal government's saying that they're going to take them, which is in violation of the Constitution, etc., etc. So, I think you're going to see that next thrust.

[00:13:11]Um, and this is the point where the administration recoils and sets up for for an autumn offensive and the opposition is also gearing up for an autumn defense.

[00:13:26]That makes a lot of sense. And talking about things being in stasis right now, I want to bring up also the Fed meeting that's coming up later this week. I think the the very broad consensus is that we won't see a change in interest rates, but I'm sure everybody will be watching very closely the commentary from Worsh. So, I wonder what you'll be looking at there. It'll be his his first meeting as Fed chair. Yeah, I think you know he's got a really uh interesting position this week in that he has to sort of he has to convince not the real people he has to convince that he is an honest and intelligent and with integrity person are the other members of the FOMC. you know, he has to convince him them that he's serious about being an independent, honest uh Federal uh reserve board chairman.

[00:14:23]And we've seen political hacks in the past in the 70s when we had very volatile inflation and economic activity as a result of a variety of issues including uh politically inspired Fed chairman. Uh so he's and he's aware of that, you know, he he knows the history.

[00:14:42]He's going to have to convince the other FOMC members that he is a honest and intelligent person to be there in the chairmanship.

[00:14:53]He's got to convince financial markets and the broader economy. the consensus the last time I looked at Fed watch which was last Wednesday so the last trading day uh was 96 plus percent assumed that the Fed uh that the interest rate would be unchanged about 3% said that they thought they might be a 25% bip decline uh 25 bit decline and no one was expecting an increase in interest rates which I think is probably skewed to the wrong degree I you know my view is it's unchanged changed to maybe even higher because last week we had very high problematic CPI and PPI and it wasn't just the energy prices obviously the energy prices were very important but if you looked at the other segments of consumer and producer prices you had a lot of issues and some of the issues with transport on the PPI transports obviously uh more costly because of the energy costs of the fuels uh so you've got a lot of problems so wash has got to demonstrate that he can be honest and effective and independent. Uh but he also has to be careful about Trump. Now Trump has signaled, hey, I don't care what the Fed does anymore and I don't care, you know, if the they don't lower interest rates. So Trump has signaled to Walsh that it's okay for Walsh to try to establish himself as somebody who can be trusted. But it's going to be a very interesting thing and it's going to be very interesting to watch his comments after the FOMC meeting because that's where he's going to prove himself or disprove himself. The vote itself will be very interesting. I assume he will vote to keep interest rates unchanged, but we'll see uh you know if there's dissent to that concept if that's what the FOMC ultimately decides that it's going to do.

[00:16:50]>> Sounds like he'll be watching or walking a very fine line there. So, we'll keep an eye and see what happens with the Fed. I want to go back to those CPI and PPI numbers that you mentioned from last week that were problematic for for inflation. I wonder what your outlook is for inflation moving forward. I know right now we have of course with this potential peace deal that may or may not pan out. Talk of reopening the straight of four moves, but there's already been so much damage and disruption to supply chains. So, what are your thoughts?

[00:17:22]Well, I do think that, you know, at some point the energy prices, well, they have already fallen some and they'll probably continue to decline somewhat. They're not going back to prefeebruary levels, you know. Uh, so I think the energy prices will remain high. And again, you know, people conflate inflation, which is the change in price levels, with the actual price levels.

[00:17:46]And unfortunately, I think that price levels stay high in the United States.

[00:17:51]and in other countries and quite frankly much more problematically in other countries uh in India and Southeast Asia and and other countries than in the United States. I think that price levels stay high and the cost of living and the cost of living relative to to uh income will continue to be restrictive of consumer spending and that's going to be very problematic. Uh, but I think at some point the rate of change, the rate of inflation increases will come back down. Probably not down to 2% though. I don't think you're going to see 2% uh for at least a few years.

[00:18:35]>> Yeah, the 2% feels quite unattainable at least at this point. I wonder if we can also take a look at the broader US economy and if we put together these factors what your outlook is looking like there. How how is it looking as we continue on into the second half of 2026? You know, we have for several years like since 2021, 2022, we have been saying that we thought there'd be a recession sometime 2025, 2027. And our current long-term economic outlook still has a recession there and we're actually, you know, two months late in in updating it because we're struggling with it. On the one hand, the economy has been stronger than CPM and a lot of other people thought and there are uh greater uh volumes of consumer spending.

[00:19:31]Debt is rising. Consumers are living off of credit cards and credit and credit.

[00:19:36]Uh they're spending more than they're earning. Uh but they are spending and that continues. Uh and the administration is counting on it. It was really amazing to hear them talk on the talk Sunday morning talk shows. U businesses also have started to invest more although they can come back and that's skewed. We're working on trying to get good numbers. A lot of that's skewed by the increase in AI and data centers uh and cryptos and a lot of the money is being put into those things which makes business investment look better than it really is. a lot of breadandbut industries and and businesses are suffering in terms of their profitability and their investments and so you have a lot of issues. Bottom line is that on the one hand, the economy looks like it could continue to bump along, but it could easily tip over into a recession in and yet this year even in the United States.

[00:20:40]And if you look at other countries, they also are at increased risks of tipping into recessions uh than than is the US. So both on a US basis and on a global basis, the economic outlook remains extremely uncertain and perilous.

[00:20:59]>> Yeah, I believe here in Canada where I am, we're we're in a technical recession already at this point. So we'll keep an eye on that. I know you've been looking for that for some time in the US. So for gold, we've talked about the Iran war, we've talked about what's going on with the Fed. I wonder those are top of mind for investors. for you. What other key gold price drivers are you keeping an eye on right now that we might be overlooking?

[00:21:24]>> Well, you know, obviously we're paying attention to central bank purchases and sales. You saw some pretty heavy sales by Russia and by Turkey. You take those out. You had some sales by a couple other like I think four other countries in the first quarter. No other country was selling gold in the in April in in If you look at the buy side of the ledger for central banks, you've seen more central banks buying in the first quarter. They backed away in April and they seem to have backed away in May as well, but you are seeing central banks continue to buy. They perhaps reverting more to price sensitivity, waiting for the price to fall. Um, and so we're watching that. We're watching overall investment demand. I mentioned the ETF investments earlier I think. Uh but you al we're also watching physical demand. Physical demand is really messed up in India right now because of the economic stringencies caused by the fact that the Indian economy is heavily uh involved with both imports and exports from the JCC from the Persian Gulf region including Iran and the war and the trade disruptions have really hurt the Indian economy their start for foreign exchange they put on import controls for gold and silver. Uh and you're you're seeing in investors who hold enormous I mean record there's more gold and silver held by investors in India than any other country in the world. But what we've seen over the last year and it's increased this year is they're not selling the way they used to. There used to be a flow back and forth that those people who hold gold and silver, if at all possible, they're holding on to their gold and silver and they're using their rupes to live right now. So, you're seeing, you know, kind of a mixed investment demand picture there. In North America and Europe, you've seen a fair bit of physical selling, more so in silver than in gold.

[00:23:38]But there have been investors who have been taking profits at what are record prices, you know, and they say, "Oh my god, you know, gold's down $1,500 yet Friday from from its peak in January." Yes, but it's higher than it's ever been prior to October. So, there are any number of investors who bought a long time ago at much lower prices who are saying, "I'll take my profits here."

[00:24:04]I think that helps give us a picture of what's behind gold. And so we talked about how this summer it looks like gold is going to trade in in that range that we spoke about, but you're you're seeing higher prices toward the end of the year. I wonder is there a specific trigger that you think would break gold out of this range? How how are you looking at that? Well, there's a whole bunch of things that we're watching and it would be some combin you know people always say what's going to cause the next recession or what's going to cause you know and it's always a combination of factors and so it's a combination of factors. We are looking for weaker economic uh trends in the in the third and fourth quarter in the United States and elsewhere. We are looking for the US Iranian war to actually continue and we think that the the agreement that's been the memorandum of understanding that is supposed to be signed on Friday simply kicks the can down the road. Yeah. And they have 60 days to reach an agreement on all these terms and they will not reach an agreement. I mean Iran's not going to give up its uranium. Iran's not going to give up its its military defense development programs, including the potential for nuclear weapons, you know, and the United States is not going to give up some of its demands. So, the Iranians have looked at the US domestic political situation and said, "These guys, these guys are willing to walk into a trap." You know, so you've got a problem right now. And more and more people in the United States are mad at the Trump administration for this war and for the economic consequences within the United States of this war. And there the the Trump administration said, "Let's put this all on hold for 60 days until we're 60 days closer to the midterm elections." Right? So the Iranian negotiators are fully aware of the US political system and they know that in the middle of August when those 60 days are up, the Trump people are going to be even more desperate to try to put lipstick on this pig and it's going to be more damaging to Republican efforts to to maintain the House and Senate. So it's almost like the Trump administration incredibly naive to reach this memor to agree to a memorandum of understanding saying let's wait until it's even more dangerous for us to have this hostility you know what are you going to do in November in the middle of August are you going to say okay now we're going to start bombing again we're going to increase the war effort meanwhile you still have Ukraine you know Trump's in in in France this week for the G7 the G7 is like really upset with with the US administration as is everybody else. It's just there's all kinds of economic and political issues that could come together in the last four months of this year to cause investors to say, you know, the price of gold went from, you know, $2,600 to to $5,000 between August and um January, August 2025, January 2026. What's it going to do this year? And I think that you you know our expectation is weaker economic conditions, continued political problems, continued war uh in between the United States and and Iran, possibly other political consequ uh conflicts arising, ongoing problems with the Ukraine, issues related to the Trump administration's relationship to Putin.

[00:27:54]Uh we haven't even talked about North Korea, China, and Taiwan. You know, there are all kinds of issues that probably will come together and create an illasing feeling that's going to cause investors to say, "Okay, and what's it? Where's the stock market?" You know, is the stock market going to be at a record price? Are more and more investors going to say, "Oh my god, the stock market is at a record price because there are all these shell companies, AI and, you know, spacecraft." Yeah, let's let's be honest. That thing's never going to be profitable. You know, no investor will invest in SpaceX waiting for the dividends.

[00:28:36]Um it's a joke. The stock market has done very well because a few companies of spurious economic value have had very sharp increases in their stock prices.

[00:28:51]That means that it's extremely vulnerable to a 10, 20, 30% decline later this year. So, there are any number of factors that could come together and make this very fine molatani soup that takes gold back up over $5,000.

[00:29:10]I know there's always this temptation to pick out the one factor that's going to do it. But yeah, it does sound much more likely that it's it's that that mix of things that ultimately comes together.

[00:29:21]So maybe we we leave gold there for now and take a look at silver. silver. If we look back at say over maybe the last quarter, Q2, would you say that the price has mostly been driven by the same factors as gold or any are there any silver specific factors that stand out to you?

[00:29:42]>> There are uh you know, you've seen you're seeing a lot of fabricators look to reduce their silver use per unit or get out of it. and you've seen, you know, a couple solar panel manufacturers getting out of it. Um, and other fabricators there. I was at the International Precious Metals Institute's 50th anniversary conference last week and you know the IPMI has a lot of uh refineries and scrap dealers and fabricators and the the financial institutions that provide financial services to them. And you know there is big talk about the enormous amount of silver that investors have sold you know over the last two and a half years and large amounts of like unsold you know if you're selling medallions or 100 ounce bars or or kilo bars of silver you're probably that stuff's going to be you're going to get a discount to the spot thousand ounce bar good delivery bar price when you sell that back as an investor and then that stuff's going to get refined, recast into thousand ounce bars which can be sold into the international market and that volume has been increasing.

[00:31:06]But if you have uh Maple Leaf or uh silver eagle or other coins that have a premium to the spot price, the the the dealers will hold on to that, waiting for new investors to come in and say, "Hey, I want to buy these and say, well, I can buy new ones from the RCM or the US Mint or whomever, or I have, you know, last year's mintage that I can sell you right here at a better price."

[00:31:33]So, there's an enormous stash of silver coins built up in the market. There's a lot of silver that has been going off to the refineries to be melted down. The refineries have been backed up at times and they've actually stopped accepting their traditional scrap, the the the processed scrap from refineries uh from fabricators and the end of life electronics and jewelry that there's been rejections of that by refiners because there's so much metal. So you you're seeing an increase in secondary supply, you're seeing reductions in fabrication demand to some extent or at least in the growth rate of fabrication demand and you're seeing some investor u hesitance to continue to buy. So we've seen the price come down from that peak of 120, you know, and it's been trading between say 60 and 90. probably going to continue to trade in the kind of broad sideways range uh until we see later in the year.

[00:32:32]>> All right. So, it sounds like on the demand side, reduced demand both on the the retail and industrial side for silver, is there anything significant that you'd pull out on the supply side for silver? Anything from the miners?

[00:32:46]Have they responded to higher prices or not so much? I also know a lot of silver is a a byproduct of base metals mines and that kind of thing. So, anything you'd pull out there?

[00:32:56]>> Well, you know, again, as I said, there's a lot of scrap coming in and and a lot of it's been investor material as opposed to traditional scrap, but you are seeing traditional scrap come in.

[00:33:09]Mining side, you'll see a much slower response. But yes, the mining industry is responding to the higher prices. They have enormous reserves and resources that they can develop but that's going to take a long period of time. You are seeing a couple companies you know go public and and raise money uh and that's going on. In terms of the byproduct producers you have seen an increase in hedging of byproduct silver. uh you know they still won't hedge their primary products because they want their c their investors to think that they're fully exposed to the upside uh even at the risk of being fully exposed to the downside. uh but they will hedge their byproduct silver and we have seen an increase in hedging but you know the mining sector is going to take several years to respond to higher prices in contrast to the scrap business which is almost immediate.

[00:34:09]>> Yeah. Yeah. I think we have to always remember how how long it can take. So in terms of the price it sounds like similar to gold trading sideways with volatility over the course of the summer. I think you said between that 60 to 90 range and then potentially is is silver going to move higher again with gold toward the end of the year. I think a lot of people are wondering can it take another run at that $100 triple digit level?

[00:34:34]>> I think it can take another run at that, you know, and we're working right now.

[00:34:38]We're going through this whole issue.

[00:34:40]It's a very interesting for silver and for gold because you've got you've got the fundamentals of mine production, secondary supply and fabrication demand sort of suggesting that prices are too high to be long-term sustainable. That doesn't mean that they can't stay this high for three or five years, but you know in the long run beyond five years they're probably unsustainable. But the other fundamental is investment demand and it says yeah prices can stay high this high as long as the economic and political risks and uncertainties are there. You know we're not going to we're not going to let up on our interest in having more of our wealth in gold and silver until the world looks like a safer place. So you tell us when the world's going to be a safer place and we'll tell you when the the prices of gold and silver could fall. So I do think that the price of silver will make another run to 90 and $100. And I think that it could stay high for a period of a year or two more and maybe even longer depending on how the rest of the world develops or doesn't.

[00:35:55]I think that's that's helpful in terms of looking at silver and I want to spend at least a little bit of time on platinum and palladium as well. So I think that at plat platinum moved similar to gold and silver back in January where it was going up to new all-time highs. Palladium maybe a little bit different. It had its all-time high I think a few years ago at this point.

[00:36:17]So it wasn't really following along.

[00:36:20]What would be your your key takeaways from their performance so far in 2026?

[00:36:24]Well, one of the things that we're seeing is increased expectations of lower prices. And so in the market when you talk to bankers and traders and fabricators and refiners and produ and mining companies, there's a view you look at the gold the platinum plating prices and and you know platinum. Yeah. Paladin was running $800 to $1,100 from 2015 until last May and then it broke above $1,100 and it made this run to like $3,000, you know, and now it's back down to 1700 today, 1776 as we speak in honor of the US uh anniversary. But uh there is a view that that spike really was investor-driven and speculative driven and that the the bloom is off of that rose and the price is coming down and it's very interesting because like we had London platinum week in the middle of May or late May and then we had the IPMI last week and again the dealers and the traders and the refiners were saying is Very interesting because they they almost all thought that the platinum price and palladium prices would fall. But when you ask them how low they would fall, they said, "Well, we think that the bloom is off the roads and these things are coming down and they're not going to rise back with gold and silver because it was a matter of marketing hype that started that and then there was this momentum and we saw the momentum reverse in February and March. uh you've seen heavy invest uh ETF investor sales of of platinum not so much in palladium. So then you say, "Well, how do you low do you think it's going to get?" And they said, "Well, I I wouldn't be surprised to see $1,500."

[00:38:22]Yeah. Yeah. That's not low. $1,100 would be low. And I don't think it's going to go back to $1,100, but I do think there's downside potential. In palladium, it's pretty much the same sort of situation, but a little bit more bearish because investors are less involved in the palladium market than they are in the platinum market. So the palladium market I think is more vulnerable to those other fundamentals mine production secondary supply especially and fabrication demand and fabrication demand is you know big part of its auto but the auto industry while it's up auto sale production and sales are up in most major markets slightly this year uh they're at risk that they could come down um and so I think that there's a a greater pessimism toward platinum and palladium and I don't know that the prices rise back the way gold and silver does.

[00:39:24]>> Very interesting. And I did want to bring up the auto industry element for platinum and palladium. I know when there is a price differential, we can see substitution between them and and there is one right now. So I wonder if that is something that's playing out in the auto industry at the moment or or they're not ready to to do that right now.

[00:39:44]You know there's there's substitution and then there's substitution and you can in within an auto model year auto companies you know there are people in the platinum mining side that will tell you this is not true but the auto industry will tell you it's true. The auto makers multi-certify their cars. In any jurisdiction where you're selling your car, you have to certify this car meets your emission standards with this size of engine and one of these different catalysts. And that gives you the capacity within a year to shift a little bit more to the palladium or a little bit more to platinum. So that's the the that's the lowercase substitution. Then there's the larger case substitution which is let's make a major change on a more longer term basis and that's going to involve changing the fuel injection system, the engine, the exhaust system and the catalyst and the substructure.

[00:40:53]You know, when we first started using catalysts, the substructure was a metal grid and the muffler and the tailpipe and the catalyst were sort of like wired to the bottom of it. But for the last several decades, the undercarriage of a car is a molded alum uh metal sheet and it's got indentations. This is where the muffler goes. This is where the catalyst goes. So, if you're going to change between platinum and palladium, with palladium, you're going to move the muff the the catalyst closer to the engine because it needs a higher temperature.

[00:41:28]And with pa platinum, you're going to move it further away because the higher temperature will actually reduce its effectiveness. So, one of the reasons why you saw a very slow transition when the palladium price was so expensive relative to platinum was that they had to re-engineer the undercarriage, the engine, the fuel injection system, the whole vehicle. that's been done. But going back and forth that way, you know, I was actually looking at a brand new car the other day and for some strange reason I was looking at the undercar carriage and yes, it's molded for a platinum intense catalyst.

[00:42:09]So that those the the capital substitution is much slower to happen and you probably wouldn't happen see it unless you know platinum's I guess about a $700 no about a $400 uh premium to palladium right now. You're going to have to see that persist for several years before that uppercase substitution occurs. That doesn't mean that you can't have the lowercase substitution going on, which you probably are seeing.

[00:42:42]>> That's very helpful. I didn't I didn't really know that there were those two different levels to substitution. So, I think that will help people understand what's going on. All right. I think we've done a pretty good job covering gold, silver, the platinum group metals.

[00:42:55]I will let you go unless you had any final thoughts that you want to leave investors with right now.

[00:43:00]uh you know I think yeah you know we talked about the fundamentals of those foreign markets and then there's the the broader issue which is you know the economic and political environment and part of the economic and political environment is a deterioration in the quality and integrity of information and it's always been an issue. It's always been an issue in precious metals. It's always been an issue in politics. It's always been an issue Yeah.

[00:43:30]uh you know um what's uh Churchill said that on it truth is the first casualty of war you know it's you know but it's gotten much worse uh the the amount of misinformation and conscious disinformation and and trolling and all this stuff and that just makes it that much worse for an investor to decide what it is and you know there are people you know the Russian government, the Soviet government going back to the 30s, you know, said, "We want to sell disinformation in the West in the United States and Europe because we want people to stop thinking that they can believe anything their governments say." And now you've got governments saying, "Hey, we want to do the same. We want we want people we want to beat people into intellectual subservience where they simply say, "Oh, you can't believe anything that anybody says because that opens it up to tyranny."

[00:44:35]And and it's gotten much worse and it's going to get worse with all of the AI and other stuff.

[00:44:42]>> Well, I think that's an important warning to to end on. So, thank you so much for coming on once again to talk about precious metals and the broader economy. I think this was really great.

[00:44:53]>> Thanks for having me.

[00:44:55]>> Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Jeffrey Christian with CPM Group. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.