CPM Group Christian Looks For Gold Prices To Accelerate Upward

23-Sep (Metal.com) — Jeffrey Christian, managing director of CPM Group, looks for gold to rise modestly over the next two years but then start to accelerate to the upside more sharply.

He told the Denver Gold Forum Tuesday that he expects mine production to continue rising into 2017. But then output is likely to start falling, while investors and central bankers will be competing to buy the smaller amount of newly refined mine supply.

…The speaker said he favors owning gold “not because the world is going to collapse” but because there are “other problems out there.” However, he also cautioned against “falling prey” to excessive pessimism that sometimes has no basis. He also commented that gold has not lost its safe-haven status, although the metal does not necessarily rise every time bad news occurs in the world.

…“In 2018, mine supply starts falling,” Christian said. “It’s a foregone conclusion.”

This will happen even if gold prices start rising again, since there is a long lag between when prices and producers can ramp up output.

“We think the world will get more nasty…,” Christian said. “And when they get to the market, they’ll see central banks buying. And the central banks and private investors will compete for increasingly scarce ounces of newly refined gold.”

He commented that private investors hold an estimated 1.3 billion ounces of gold, while central banks hold another billion. Still, “people who hold gold tend not to sell it,” meaning those who want to add gold to their holdings will have to rely upon newly refined gold.

“That’s why the fundamentals matter in the gold market,” Christian said.

[source]