Gold Price Explosion Not Over (Uncut) 04-23-2025

Gold Price Explosion Not Over, Here’s Next Target As Debt Crisis Unfolds | Jeff Christian

Gold is outperforming stocks, it’s outperforming bonds, it’s outperforming silver, it’s outperforming copper, it’s outperforming oil, because gold is that safe haven that you run to, that everyone runs to in economic tough times, right? You’re going to have a deep recession, you’re going to have higher inflation, you’re going to have lower growth, you’re going to have further deterioration in the United States stature, both domestically and on an international basis. The gold price has once again hit a new record high, it’s now trading above $3,400, $3,430, as I’m looking at the price right now on Monday, April 21st. Jeff Christian, managing partner of the CPM Group, is here to break down what’s been driving this rally, this divergence between gold and many other asset classes, why it’s been outperforming the rest of the market, what’s next for the gold price, what’s next for silver, and critical minerals.

China has been banning key critical minerals, how will this affect the global supply chain? Very key issues we’ll be discussing today. Jeff, welcome back to the show, good to see you. David, it’s a pleasure, thank you for inviting me back.

Very, very interesting time for gold, unprecedented prices. Last time I had you back on, actually I was shocked I didn’t have you on since late November, but time flies, Jeff. Anyway, it’s an opportune time to have you back.

Late November, you had called for the average gold price to be around $2,700. We’re looking for gold prices to average around $2,700 or so over the next year or so, and we’re looking for a higher average price in 2026. We then think that that could be a cyclical peak, and you could see a period of some weakness, although we think that gold prices on an annual average basis stay above $2,000 for the next 10 years.

What is your average gold price now, and why have you updated your average gold price? Yeah, well, we constantly update our gold price. Right now, our annual average projected for 2025 is about $2,960, $2,956. Yeah, it’s up about $250 from where it was six months ago.

That basically reflects the fact that the price has been moving higher. We started this year at $2,662 an ounce for gold. That was compared to $2,000 at the start of 2024.

So our whole structure of our model moves upward with the historical price being higher. So we’re moving from a higher base. Obviously, $2,950 is down from where we are today at $3,400.

Our expectation is that the price could soften over the next five or six months, and then probably strengthen going forward. But the underlying factors are the tremendous risks in the economic environment and in the political environment, not only in the United States, but really on a global basis right now, and the tremendous amount of uncertainty and anxiety that those risks are bringing to investors. And I think the broader narrative that we have to address is why gold has been moving the way over the last couple of weeks in particular.

Take a look at my screen here. Let me start with stocks first. So this is gold versus the S&P 500.

Over the last one year, there’s been a loose correlation of stocks and gold that have both moved up in tandem. This correlation completely broke down as of the beginning of April, as you can see in this stark divergence you see on the screen here. It’s evidenced by gold going up to new all-time highs, while the stock market has continued to slide.

Around the exact same time, which is the beginning of April to the second week of April, gold has been diverging from asset classes as well. The U.S. 10-year yield, this is the 10-year yield versus gold. Gold’s been moving broadly in line with the bond market up until again the same time.

Gold’s been going up while the yield’s been going up. Previously, they were moving in inverse directions. And interestingly, around the same time, the U.S. dollar has broken away from the 10-year yield.

See this perfect correlation between the 10-year yield and the dollar up until again the same time, beginning of April, when the dollar sank and the 10-year yield rose. So there’s something going on. What is the bigger picture here triggering this divergence of all these asset classes that previously held pretty consistent relationships? I don’t know if you’re speaking euphemistically, but it’s not early April that matters.

It’s April 2nd. And April 2nd, Trump came out with this incredibly bombastic set of stuff full of misinformation and inaccurate information, but tremendously negative tariffs. And if you look at tariffs of the size that he’s talking about imposing and the way he’s talking about it, he’s not trying to negotiate with countries.

He’s trying to extort compliance. He’s a very blunt extortionist. And all of these divergences have been since April 2nd when he came out with his grand scheme for global tariffs.

And those global tariffs and what he’s been talking about and how he’s been talking about it has heightened the risks that people are afraid of and increased their anxieties and uncertainties. Whereas prior to April 2nd, we were saying we wouldn’t be surprised to see a recession on a global basis later this year into 2026. And to some extent, we were a voice in the wilderness.

Now we’re the consensus. Goldman Sachs says, oh yeah, it’s a 46% chance of a recession yet this year. JP Morgan says it’s 50%.

I think Ray Dalio says we’re already in a recession or the recession will start imminently. All of a sudden, everybody says, yeah, you put these kinds of behaviors, not just the tariffs, but other Trump economic policies and political policies, and the brutalistic thuggish way that he’s approaching all of this, you put that into play on the global basis and on a national basis, you’re going to have a deep recession. You’re going to have higher inflation.

You’re going to have lower growth. You’re going to have further deterioration in the United States stature, both domestically and on an international basis. Now, the really interesting divergence is the divergence between gold and the bond and gold and the dollar.

Normally, in this kind of economic environment, you would see the dollar and gold rising together, but you’re not because what you’re seeing now are people saying, screw the US. If I offered you a $100 bill, but you had to pay me $115 for it, would you take that deal? Of course not, but that’s exactly what happens when you purchase gold and silver and high dealer markups at significant costs to each purchase. Well, that’s where today’s sponsor comes in.

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Invest smarter now. So this is the dollar chart versus gold. So the selloff of the dollar, the DXY, can that be explained by foreign investors dumping the dollar and buying gold, or is this just a spurious correlation here? It’s not foreign investors.

It’s U.S. investors primarily, but it’s also foreign investors. Interesting. Going back to the dollar and the yields, so one more time, the DXY versus the 10-year yield.

How can you explain this particular chart? The yield’s been rising, but the dollar’s been falling. So clearly there’s just been an outflow of the dollar, but yields should fall on that, but it hasn’t. Yields are rising because of the inflationary implications of not only the tariff policies that Trump is talking about, but other domestic policies, and you’ve already seen this.

I mean, Herr Musk said two weeks ago, I overestimated that I could cut $2 trillion from the budget. I think it’s going to be closer to $150 billion, right? $2 trillion, $150 billion, but the reality is that the deficit spending is exploding under these guys. You’re losing business, you’re losing tax revenues, you’re losing other revenues, and your unemployment payments are starting to increase.

You start cutting back on imports because of tariffs, you’re going to have further reduction in economic growth, further reduction in corporate profits, higher inflation. And in that kind of environment, you’re looking at an exploding deficit and an increase in US federal debt. So the CBO and other nonpartisan groups are saying, you’re talking about an addition of $580 billion a year to the annual deficits over the next 10 years based on what Trump is saying he’s trying to do.

Now, that’s on top of a $1.8 trillion deficit, which is already obscene and unsustainable. So now you’re talking about a $2.3 trillion annual deficit as far as the eyes can see. You’re talking about the US debt going from 36 trillion to something close to 60 trillion within a few years.

That’s unsustainable. And in that kind of environment, investors around the world are saying, treasuries may not be as great investments as we thought they were relative to other investments. You have some other issues there too, which we can talk about later.

Yes. And just going back to gold, gold is reacting today partly because also perhaps Trump is doubling down on his rhetoric against Chair Jerome Powell, Fed Chair Jerome Powell. He called him a major loser on social media.

He said that if he were not to cut anytime soon, there could be damage to the economy. I’m paraphrasing. I’ll pull up the exact quote in just a minute.

But the point is, Jeff, it’s been a few weeks since April 2nd. Gold is still going up. This divergence has not recoupled.

The markets seem to have, I guess, believed that things are going to get worse. Otherwise, why is gold still going up? Yeah, exactly. I mean, two weeks is a blink in the eyes of the markets.

The reality is that the past two weeks, and again, it’s not just the tariffs. And a number of people have said this. Powell said this.

Powell’s spot on. He’s talking about higher inflation, lower economic growth, the potential of a recession. And he’s saying it’s not just the tariffs.

It’s all these other policies too that you have to worry about. And Ray Dalio saying the same thing. And every major, sober, unbiased economic source of information has been saying that.

And it’s going to continue, and it’s going to get worse. Gold right now is reacting to it. Normally, if you have this kind of economic situation, what you see is investors around the world race to the dollar, to gold, to US treasuries, and to a lesser extent to silver.

What you’re seeing now is investors around the world are racing to gold and to a lesser extent silver. And they’re downplaying their interest in treasuries and in the US dollar. And that’s a very important long-term factor.

This is not something that you would expect to be gone in two weeks. This is something that is suggestive of long-term, decades-long weaknesses in the US economy relative to the rest of the world, and a loss of stature and status and power for the US as a nation and as a government. Investors are moving to silver.

What for? Silver is an industrial metal. Silver is less. And silver has responded to some extent, but to a lesser extent.

Silver is primarily an investment in the Indian subcontinent and in North America. Gold is an investment and a safe haven around the world. And so what you’ve seen is a much more powerful move into gold than you are in silver.

And then you’re seeing no movement into the dollar and treasuries. And in fact, you could see a strike against the treasuries. Let’s take a look at what I was alluding to earlier, Truth Social, Trump’s post.

Preemptive cuts in interest rates are being called for by many, with energy costs way down, food prices, including Biden’s egg disaster, substantially lower, and most other things trending down. There is virtually no inflation, with these costs trending so nicely downward, just what I predicted they would do. There can be almost no inflation, but there can be a slowing of the economy, unless Mr. Too Late, a major loser, lowers interest rates now.

Europe has already lowered seven times. He said power has always been too late, except when it came to the election period, when he lowered in order to help Sleepy Joe or later Kamala get elected. How did that work out? Okay, I think the fact that he said that the economy is going to slow, a slowing in capital letters of the economy, unless Mr. Too Late lowers rates, which the market is not pricing in, that Powell’s going to do, by the way.

There’s a very, very small chance that he’s going to cut by May, as priced in by the CME FedWatch tool. The market is looking at this and saying, well, the president is admitting that there’s going to be a recession. If you want to characterize this comment, intellectually, it’s puke.

It’s vomit. It’s total garbage. He’s inaccurate.

Egg prices rose 6.5% last month. They’re not down. They rose 10% the month before that.

Oil prices came down last month, but they had gone up in previous two months. So you have oil prices. Oil prices are $62 a barrel right now, but people don’t buy oil.

They buy heating oil and they buy gasoline, and both of them fell in March. But if you take out that volatile energy component and you look at consumer prices, less food and energy, they actually were about 2.6%, 2.8%, if I recall correctly, which is about what it’s been for the last 12 months. So you’re really not seeing inflation decline.

And this is just propaganda. It’s total nonsense. It’s inaccurate.

You have to be completely devoid of either empirical firsthand knowledge, i.e. you don’t go to the grocery store, you don’t buy a shirt, or you have to be willfully ignorant to not know that inflation’s not gone. And in fact, there are new inflationary pressures. And in fact, the tariff policies will probably prompt inflation and the cost of money.

Interest rates is probably going to go up too. Well, let’s just back up for a minute. Why does Trump want lower interest rates now? Does he foresee that the economy is going to slow with tariffs if he doesn’t get the lower rates? Yeah.

When he says in public that he thinks that the economy might see a slowing down, what he’s actually saying is, my people are telling me we’re racing into a recession, a deep recession, a bad recession. And I can’t say that in public because I have a very small ego. And so I’m going to say, oh, yeah, we’re not going to have a recession.

We might see a slowing down. What Trump says about the economy is meaningless to any sober analysis of what’s actually going on in the economy. Even if Trump gets what he wants, which is Fed Chair Powell to lower rates, would that be enough to prevent a recession? No.

So there’s nothing the Fed could do at this point? Well, there’s some things that the Fed can do. What the Fed can do is stanch the bleeding. It can ameliorate the damage that a recession does.

Monetary policy can only do so much. If you really want to avoid a recession, you have to radically change fiscal policy, not monetary policy. Well, OK, if you know this, if Trump’s team knows this, and there’s smart people working for Trump at the White House, economists, why is why is Mr. Too Late, as Trump calls him, still not going to move the needle here? This is the Fed watch tool.

No chance, very small chance of a cut by next month. What is Powell waiting for? Powell’s not waiting for anything. Powell is paying attention to both economic activity and inflation.

The Fed’s charter says it is supposed to try to keep inflation under control and maximize employment, not economic activity so much, but employment. And the Fed is looking at employment holding up relatively well at this time, but the prospect of much higher unemployment going forward over the next several months. But it’s really looking at inflation.

And you don’t have to be a genius to know this, because that’s what Powell said in his comments. That’s what he said. He, unlike Mr. Trump, is extremely honest about what he sees and what he thinks.

OK, so so when do you think that the Fed, the FOMC could change their interest rates? I think that’s the wrong question, David. OK, but the answer it, I think it’s at least six months down the road. Why is that the wrong question? What are we supposed to be looking at here? The key is not monetary policy.

It’s fiscal policy and it’s real supply and demand of goods and services. Those are the things that really move it. If you put a model together and say, I want to model and project future economic activity, you have four sets of factors that you’re going to look at.

The first one is the supply of goods and services. The second one is the demand for goods and services. The third one is fiscal policy.

And the fourth and least important factor is monetary policy. With all due respect to monetarists, that is the least important, the monetary policy. And the monetary policy has to some extent already been hijacked because the Fed can’t do what it would like to do because it has to pay attention to the damage being done to the real economy by fiscal policy.

One argument that I’ve heard, and I’d like you to evaluate this, is that the stock market going down is going to cause, the wealth effect is going to basically cause an economic slowdown through the stock market crashing. So the stock market is down. The S&P is down about 20% at its worst, about 17% year-to-date now from its February highs.

And the argument here is that if the stock market continues to go down, people are going to spend less money. There’s going to be less investment in the private sector. The Fed will have to act if the financial markets perform poorly.

So basically Trump and his allies are forcing the Fed’s hand if he continues escalating the trade war. Yeah. I mean, there are people who believe that Trump’s game is to actually crash the economy so that people will say, you guys have to save us and pull us out of a recession or even a deeper recessionary situation.

I don’t necessarily agree with that. And I think that people who look at the stock market decline and say, the stock market decline is the major factor behind the wealth effect, don’t understand the real economy. The wealth effect and people’s concerns about declining wealth has already fallen sharply.

The concerns about falling wealth have already risen sharply. You have had an enormous decline in consumer confidence, as well as business investment confidence too. So you’re already seeing that.

Part of that, a small part of that reflects concerns over the stock market, but a much larger part of it reflects concerns about personal employment, personal wealth. And you have to say, I mean, half the population in the United States don’t own stocks and don’t intend to ever have enough money to own stocks. So the stock market, there are people who don’t know what they’re talking about who say that the Fed will act to protect the stock market.

The Fed doesn’t give a hoot about the stock market, except as a leading indicator or an indicator of consumer and investor confidence. The Fed cares about employment, overall economic activity and inflation. It cares about the real economy.

And it has repeatedly said, and I don’t know why people don’t listen to what they say. It has repeatedly said, the stock market is not the economy. If you want to know what the economy is doing, look at your economic indicators.

The stock market is one economic indicator, but it’s a very weak one. It’s a very tenuous one. Or as my old boss at Goldman Sachs used to say, the stock market has predicted 14 of the last three recessions.

But you don’t think the stock market crashing causes a recession? No. A recession causes a stock market crash. Interesting.

Well, this is another indicator that people have been writing about. The gold silver ratio is spiking to above 100. Last time this happened was during the pandemic in 2020.

So that was a major world crisis. Is it signaling some sort of global crisis now that we haven’t already talked about? Well, it’s talking about the economic and political crisis that we are talking about. And the fact that investors, and yeah, look, gold is outperforming stocks, it’s outperforming bonds, it’s outperforming silver, it’s outperforming copper, it’s outperforming oil.

Because gold is that safe haven that you run to, that everyone runs to in economic tough times. That’s why gold is outperforming silver. Silver is to a lesser extent that.

But silver is, as you said, it’s an industrial metal. And if you look at the investment demand and you say to investors around the world, hey, things are going to get tough, what are you going to do? The majority of them say, I’ll buy gold. And if I can’t afford gold, I’ll buy silver.

Last time this happened, though, this gold silver ratio quickly fell back down to below 70. That was during a period of Fed quantitative easing, as you know. Silver greatly outperformed gold.

The point I’m making right now is, Jeff, is this time to rotate into silver? Can we expect the same thing to happen now? No, I don’t think it is. I have a diversified portfolio and we recommend our clients to have a diversified portfolio that includes gold as well as silver. But I don’t necessarily think that silver will outperform gold over the next period of time.

If your chart goes back, I don’t know how many years. If you go back to 1990, 1994, the gold silver ratio got very high for about four years or five years. Well, what is a fair gold silver ratio for you right now, if there is such a thing? I don’t think there is such a thing.

I think that the gold silver ratio is a measure of the relative strength of gold and silver, and it has no worthwhile information toward prognosticating about the future. If you want to know about gold and silver and the gold silver ratio, you study the gold market, you come up with a price projection, you study the silver market, you come up with a price projection, and then you divide one by the other. That’s what we do.

Yeah, we have 10-year projections for gold and silver prices as well as other commodities. And when somebody says, what do you think the gold silver ratio is going to be over the next 10 years? We look at the gold price projections and the silver price projections, and we divide one by the other, and we say, this is it. But it’s not generated by some sort of magical, mystical mixture of the two.

And you don’t look at an average and say, oh, well, the average has been 40 or 70, and ergo, we will go back to the 70. Because if you look at your chart, that average gets touched very briefly as the ratio is going up or going down. And the important thing is, if you look at your ratio, you can see, okay, it’s been spending most of the time above 70, really going back to 1998 here.

Well, no, it was below that. And then 2014, it got above 70. And at that time, you had any number of pundits saying, oh, well, the gold silver ratio, when it gets up to 80, it reverses.

And it’s basically been above 70, 75, 80 for most of the last five years, 10 years. If I’m looking at this chart, long-term chart, and I see that the gold silver ratio has been just steadily trending up as an average ever since basically 2011, when it dropped. I would think to myself, what is the point of buying silver, if the gold silver ratio has just, according to this chart, historically just advanced up? The point is to have a diversified portfolio.

Silver prices will rise. They may not rise as strongly as gold. And silver prices are more volatile.

So some investors prefer silver because they can afford it. Some investors prefer silver because it’s more volatile. So they get more bang for their buck.

It’s like high octane gold on the upside. Problem is it’s high octane gold on the downside too. It’s a diversified portfolio.

That’s like saying, well, I’m just going to invest in one stock and I’m not going to invest in other stocks. I’m just going to invest in aerospace. I’m not going to invest in telecommunications.

You want a diversified portfolio. And within that diversified portfolio, you want a diversified precious metal portfolio. That’s why you buy silver.

But one tracks the other, silver tracks gold, but just doesn’t outperform. So then back to my, I understand the diversification argument, but if they have a similar relationship just with a supposedly, supposed to have a higher beta, but it’s not during this bull market. I’m just wondering what the point is.

Well, the people who believe that stuff, and I’m not one of them, would say this indicates that the precious metals complex has much further to go. I happen to believe that the precious metals complex does have further to go on the upside, both gold and silver. So that’s there.

But I don’t know that I base, I know that I don’t base those expectations on the gold silver ratio. And I don’t base those expectations on this rubric or how to knowster that silver always outperforms late in an economic cycle or a bull market to gold, because I don’t know that that’s statistically true. I’ve been seeing online that the fact that gold’s been outperforming silver during a gold bull market, that’s a signal for a recession.

Has that had any historical precedence? No, it actually doesn’t. If you look at the relationship of gold and silver, price increases and decreases relative to recession, what you find is that sometimes the gold and silver rise sharply before the recession, as they did in 78, 79. Sometimes they start rising years before recession.

Gold started rising in 2002, silver in 2004, and the recession occurred in late 2007 into 2009. Gold and silver continued to rise before the recession for several years, through the recession, through the recovery into 2011, because there were other factors, specifically sovereign debt problems, both with the United States Treasury and in Europe, that were causing investors to say, okay, we’re out of the recession, but I’m going to keep buying gold and silver because I’m worried about the sovereign debt issue. Whereas U.S. equities are just starting to wobble.

Basically, if I can summarize this, it’s basically saying, what’s the story with the precious metal? I’m reading an interesting piece this morning from Mike McGlone. Here’s a chart stretching all the way back. As you can see, one ounce of gold will currently get you more than 100 of silver, which is what we just talked about.

What’s significant about this? McGlone points out that this ratio tends to spike prior to and during U.S. recessions, as indicated by the red bars in the chart above. Not necessarily that it’s above 100, it’s just that every single time there’s been a recession, the gold-silver ratio has spiked at the onset of this recession. A more meaningful way to describe that chart is that in a recession, more investors are more interested in gold than they are in silver, partly because gold is seen as that financial hedge and safe haven, whereas silver is seen as something of a financial safe haven, but also an industrial metal.

Silver behaves more like an industrial metal or people hold back from silver because of its industrial uses relative to gold. Gold has 130 million ounces of new supply every year, and maybe 10% of that goes into non-jewelry fabrication. Most of it goes into jewelry and investment domain.

Silver, you’ve probably got the reverse, and most of the silver being mined a year, say roughly a billion ounces being mined and refined from scrap, probably most of that goes into industrial metals, industrial fabricated products, as well as jewelry and silverware, which in some markets has a quasi-investment basis. But investment demand tends to be, well, this year, investment demand might spike up as high as 10% or 15% of total newly refined silver. What that chart tells you is that gold does better in a recession, and that’s true, because investors turn more to gold than they do to silver.

Well, what is your average silver price for the year then? I think our average silver price is around $32, $33 an ounce in there. Okay, which is currently what it’s trading at now, if I’m not mistaken. Okay.

Is there a particular reason why you think silver’s average price is currently at the market price, whereas gold’s average price for you is slightly lower than the market price right now, meaning $2,900 is your average gold price. It’s currently at $3,300. So why is gold more overbought now than silver? Because people are more worried about the world.

Okay. And people, when they’re worried about the world, buy more gold than they do silver. So gold is bought more heavily right now, and over the last two years, three years, gold has been bought more heavily than silver.

Let’s talk about China now. China has banned some critical minerals. Let me just pull up this article here.

This was recent news. China bans export of, I believe it was seven critical minerals, if I’m not mistaken. Yeah, the new restrictions.

So here, let me just pull this up here. New restrictions apply to seven of the 17 rare earth elements, samarium, gadolinium. I’m not familiar with the others, but I’ll let you comment on this.

Requires companies to secure special export licenses to export the minerals and magnets. This was in addition to last year, they were restricting antimony and germanium. Antimony is used for ammunition.

But what, yeah, April 4th, which is basically the day after Trump’s retaliatory tariffs, China’s Ministry of Commerce imposed export restrictions on seven rare earth elements, samarium, gadolinium, terbium, dysprosium, yeah, and a few others. So what, is it significant? I don’t think that scandium, just technically, I don’t think scandium is a rare earth. I believe it’s a transitional element, but that’s beside the point.

It’s important because China is to some extent standing up to the US government’s thuggish behavior vis-a-vis tariffs and import restrictions and restricting investments in the United States and things like that. You know, the United States changed its foreign policy posture toward China. It really took, it started, the concept started setting in in the mid 90s, but by 2004, the administration under George W. changed its policy and said, we’re not trying to be good partners with China.

We’re going to see China as a threat and a competitor, and we’re going to confront them. And you started to see a deterioration in those policies. If I have one complaint about the way China is reacting to Trump’s policies or the way New York state or the way Harvard is, is I don’t think they’re being strong enough.

You know, if I were China, I would say, you know, we’re going to buy all our soybeans from Brazil, goodbye. Let’s just stop buying stuff from the United States and let’s stop sending stuff to the United States. The US economy would grind to a halt within weeks of a tougher response.

You know, if evil’s coming at you, you’ve got to turn and stare it down. And if you’ve got a bully bullying you, you don’t capitulate. And that’s what it is.

Like I said, this is not negotiations that Trump’s doing. This is extortion. Some countries didn’t retaliate.

Well, some countries didn’t retaliate. It didn’t, sorry, they didn’t retaliate and Trump removed tariffs on them. Everybody should retaliate.

That’s how you deal with a bully. Okay. It’s, you know, believe me, I’ve dealt with bullies all my life, being who I am.

You know, even when I was a small boy, I dealt with bullies. And the way you deal with bullies is you turn and stand them down, stare them down. No, I appreciate that.

But here, the Trump administration has said, don’t retaliate. And they’ve actually followed through. Scott Bissett made the message and then they removed tariffs on them.

Yeah, that’s like a bully saying, I’m going to punch you in the face and don’t you dare try to swing back. Yeah, all right. Yeah, that’s a really smart thing to, you know, oh, I’m going to listen to your advice.

Yeah. Okay. Well, that’s what a lot of countries actually ended up doing.

I know, and it’s really stupid of them. Right. Okay.

So what do you think is the next step, I would say, between China and the US? I think, what is it now, a 245% tariff on China? I don’t think China has responded by upping the tariffs at this point. I thought it was 145. Yeah, they recently, just a couple of days ago, raised it to 245.

And then China didn’t do anything. I think they’ve said this is now a meaningless number. So I don’t think they’re doing anything.

You know, the joke that’s going around is Trump thinks he’s holding the cards. He doesn’t realize they were printed and made in China. Sure.

China’s got all the cards. And, you know, I don’t know why it’s not playing them, except that it wants to try to be diplomatic. But what it’s doing, actually, is it’s allowing the Trump administration to further accelerate the reduction in respect and power that the United States government can project around the world.

Right. So going back to the critical minerals, you don’t see any disruptions to the global supply chain, because now these seven minerals are banned? There will be some disruptions, and there’ll be some rewiring. So those metals will go off to other places where they’re used, and then the products that are made with them will go to the United States and other places.

But, you know, there is a rewiring of world trade at the expense of the United States. And, you know, China’s right to sort of say, yeah, let’s let these guys completely destroy their global reputation and alienate all of their allies that they’ve built up over the last 80 years. Yeah, this is going back to your statement here.

China warns other countries of appeasing the U.S. All right. China has warned it will hit back at countries that make deals with the U.S. that hurt Beijing’s interest. Now, this is interesting.

So not only is Trump not threatening, but offering some sort of deal with other countries for not retaliating, China is now going the other way and saying, if you follow through on that and appease the U.S., they call it appeasement, they’re going to enact punishment. Yeah. Look, a lot of countries don’t like the Chinese government either, especially countries close to them.

So, you know, the Trump administration is reaching out to Malaysia and Vietnam, Thailand, countries that are close to China and that have a lot of trade relationships already with both the United States and with China. And the United States is saying, well, we can buy these equipments from you. And the reality is that you can take an electronic manufacturing plant, shut it down, put it in crates, take it to another country, reassemble it, test it and get it up and running, probably in about six weeks.

So you have a movable feast in terms of electronic manufacturing, as well as in auto component manufacturing. And it can move from other places. And, you know, the consequence that, you know, and people warned the Trump administration, they said, if you try to put import restrictions on auto parts and electronic parts and other things from China, if you put really high tariffs on it, that manufacturing doesn’t come back to the United States.

It goes to another country. Right. And so the Trump people are saying, yeah, OK, well, we’ll move it to another country.

And the Chinese are saying, if I were those other countries, I wouldn’t be so eager to appease the United States government because you’re still going to need the raw materials from us. You know, it’s like over the last couple of years, governments around the world have said we need to have our own solar power, solar panel manufacturing and company governments have come to us and talked to us about this. Should we want to build our own solar panels? And our advice to them, I shouldn’t give it away on your show for free.

Our advice to them has been, no, you should be investing in solar panel components because in the world today, you have an overcapacity of solar panel manufacturing and the components, the critical components, 90 percent plus of them come from China still. Yeah. So you’re not really by building solar panel plants.

You’re not reducing your exposure to Chinese government and imports. What you’re doing is you’re changing it from solar panels to components. And you’re spending a lot of money building excess capacity to assemble solar panels that is going to be sitting there, you know, empty.

I mean, you’ve got, I think the overcapacity is something like 40 percent headed to 50 percent in solar panel manufacturing capacity worldwide. So that’s a lot of money that’s been invested in solar panel manufacturing that is still wholly dependent on China for the components to assemble those. Okay.

Well, so then I guess just segue into that bullish on the solar complex, any metals that will be needed or metals needed to build solar panels. Is that? Yeah. Solar panels make sense.

They make sense economically. They make sense in terms of energy policies, you know, and the solar industry will continue to grow regardless of what governments do. Question is, who’s going to make the money in that growth? Let’s just finish off on gold before we go.

So central bank buying of gold is something we haven’t talked about. I know that this Chinese central bank and some others have been buying gold in the last year. So two part question.

Do you see this trend continuing now in light of everything that we’ve talked about? And second, what is the advantage of holding gold as a basically a dollar substitute in your FX reserve? Why not just hold more euros or yens or, you know, any other pair? It’s not an either or posture. First off, understand that central bank gold buying was off about 40% last year from 2023. In 2024, central banks bought about 40% less gold than they had the year before.

And that’s partly a reflection of the fact that the gold price had risen 32%. So your, you know, central banks don’t think I want to buy X ounces of gold. They think I want to put X dollars into gold and that is X dollars by less gold now than they did when the price was $2,000.

It’s not a matter of having gold or foreign currencies, other currencies. The problem with gold and with most of those other currencies is the liquidity that’s there. So if you say to, if you’re a central bank and you say, okay, I got 60% of my reserves in dollars, I want to reduce it back in the early 90s and in the 80s, I had 50%.

Maybe I can start moving that way. And central banks have been talking about this for decades. You can’t move a lot of it into the euro or into the pound sterling or into other currencies because those currencies aren’t there.

You know, Russia tried to do this thing where they wanted to pay for, or they wanted India to pay for oil imports in rupees. And the flow of available rupees was enough to represent like 10% of one month’s imports of oil in India. It’s just not there.

And in fact, because of the relative strength of the US economy compared to other places, if you look at the composition of monetary reserves, the big growth has been in other currencies. Euros, which are the closest thing to a competitor for the dollar, have gone from 29% to about 20% over the last 10, 15 years. So central banks are actually reducing their euro holdings as a percentage of their total reserves.

That’s partly because of the relative differences and the fact that the dollar has been much stronger than the euro, but it also reflects a lack of liquidity in the euro. And then you go into the pound or the yen or the Swiss franc, and then you go into those other currencies, and the liquidity and the availability of currencies to put in your monetary reserves is very low. So you include gold.

And if you look at the central banks that have been buying gold, with the exception of Russia, and maybe Uzbekistan and Kazakhstan, most of those central banks, they’re talking about going from 1% to 4% of their monetary reserves in gold. Other central banks are talking about going from 2% to 4% or 5% to 7%. No one’s looking to massively replace their dollars with gold or with other currencies simply because the availability of gold in those other currencies is insufficient for a rapid transition away from the dollar.

Jeff, that was a very thorough explanation of what’s going on today. Thank you very much. Yeah, that was good.

Where can we follow you? People can follow us at cpngroup.com. That’s our website. There are free reads, free videos, and you can see some of the, like our gold yearbook, which we came out with in March, our silver yearbook that we’ll release in May. You can see what we do.

We provide research, we provide consulting, we provide hedging and investment advisory services. Okay, we’ll put the link down below. So make sure to follow Jeff and the CPM Group down there.

Thank you very much, Jeff. It’s good to see you and catch up. We’ll have you back on again soon.

Lots to cover in the gold market, I’m sure. Always a pleasure. Thank you and thank you for watching.

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