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LAWRIE WILLIAMS: CHRISTIAN - Ultra bullish on silver long term

The New York-based CPM Group analytical metals consultancy, led by Jeff Christian, has just published its 2021 Silver Yearbook.  The consultancy has proved, over the years to be an excellent assessor of the precious metals markets.  Christian himself is a somewhat controversial character as an adamant denier of gold and silver market manipulation, which he dismisses as a conspiracy theory.  He has, in the past, been more than happy to debate his views on this with those who think otherwise and has certainly made himself unpopular with the sometimes fanatical wing among the gold bulls who believe otherwise.

However, so saying, Jeff Christian is not by any stretch a precious metals bear.  He tends to call the market as he, and his Group, sees it, and at the moment he should best be considered as cautiously bullish on gold and silver in the near term (up until the end of the current year at least.)  Beyond that he continues as a precious metals bull, but particularly heavily so in respect of silver, although maybe a little more cautious on gold.

Last week, Christian and the CPM Group hosted an online webcast as a precursor to the release of the CPM 2021 Silver Yearbook.  In his extensive introductory statement and in a subsequent Q&A session later on, Christian let the participants know his views on the likely price of silver for the remainder of the current year, and long term ,backed by an added comment on how he saw the Gold:Silver Ratio (GSR} progressing. 

For the current year his views on the silver price were a little mixed, but pretty positive overall, in that he said he wouldn’t be surprised were the silver price to fall back, temporarily, to $23 an ounce (a level we feel is unlikely considering the metal’s recent strong performance), but also he wouldn’t be surprised to see $30, or even $32, silver by the year end.

Longer term, though, is where Christian showed his ultra bullish opinion on where silver might end up within the next decade.  He saw the GSR coming down to perhaps the 40 level from its current 66.4 and the price maybe rising towards $100 an ounce.  At the very least he did see silver hitting an all-time high in excess of $50 before too long = music to the silver bulls’ ears.  Given that the GSR has nearly halved from its high of above 120 only just over a year ago, perhaps a further fall to 40, or thereabouts, should not be considered too unreasonable given the metal’s volatile history, but we still feel it is a stretch for it to achieve this.  The temptation for the silver investor to take profits in a runup to $50 might well put a cap on the price.  Silver does have a history of disappointing its investors after all, and there may well be a feeling that a good profit will be worth securing if, and when, it arises.

Christian’s view is that his ultra-high price predictions might coincide with a new U.S. recession and consequent market meltdown.  We would warn though, that if this does happen – and we think there’s a fair chance that it will – that there is a strong chance that some silver holders, who may also have invested in equities, will have severe liquidity issues, given the propensity to buy on margin, and be forced to unload good assets, like precipous metals, along with more dubious ones.  This happened in the 2008 market crash, and could well do so again even if the reasons for holding precious metals look very positive at the time.

It should be said in Christian’s support that he has a team of excellent analysts behind him, and his calls on both gold and silver prices moving forwards have tended to be nearer reality to the metals’ actual performance than many of the other commentators and analysts out there.  Don’t write his opinions off.  The overall bullish outlook for silver – and by association for gold given that a rising silver price tends to be associated with a strong gold price performance – has to be a very positive prediction.

On Monday, silver broke upwards through $28 and gold through a psychological level at $1,850.  Both precious metals seem to be consolidating at higher levels and could thus be poised to move further forward to breach $29 for silver and $1,900 for gold within the next week or so.  There does seem to be some positive momentum developing, although a degree of profit taking has been apparent in the European markets today.  But overall precious metals seem poised to regain their higher levels reached at their peaks last year.

19 May 2021

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