Jeff Christian on Precious Metal Breakdown, Iran War, and the Next Big Shift (Preview)

0:00In the midst of an Iran war, a major geopolitical escalation with oil prices, spiking, and all sorts of uncertainty, gold and silver prices have actually seen a slight correction, pulling off from their highs, and many people invested in precious metals have been wondering, why is that? To join us today to get his view on this is Jeffrey Christian at CPM Group. He is one of the most accurate precious metals and commodity analysts that we speak with on financial sense. And I do want to note, Jeff, that when we spoke with you, it was January 26. Precious metals prices were launching vertically higher. And that very same week, we saw a major peak in both metals only within two to three days from the time we spoke. Of course, that was a very timely interview because you had said that you did not think that this spike that we saw a couple of months back was sustainable. And you were warning about downside risks

1:00for both gold and silver. So your analysis that you gave during the price spike was spot on. So let's talk about what we've seen with precious metals in light of the Iran war. How come we haven't seen them spike with all of the geopolitical uncertainty that we're looking at right now? Well, I think there's several reasons. And let me start with the first one. First, the first one is the war. And the fact is, this war was well known to be coming. They were moving two battleship groups, which is like anywhere from 20 to 60 battleships into the region. They were threatening to do this. And to some extent, the rise in gold prices, the $5,500 at the end of January, and the rise in silver to $121. Represented or included investor nervousness about the fact that the United States and Israel were preparing to attack Iran. The fact is, you know, when they did attack it, which was February 28th, the month after the peak in the metals prices and the

2:02metals prices had come down somewhat, when they did attack it, you know, in terms of, hey, we won the first day out. You know, and then it was like, this thing's going to be a couple days. It's, you know, we're mop up action. Well, when the prices fell late last week, early this week, we were two and a half, three weeks into the war. And it had not gone, as Trump had said. So we went in there, it'll prepared. Everybody said that the Straits of Hormuz would be closed, that we couldn't keep it open. So you had, when the prices of gold and silver fell sharply, and they fell sharply along with oil, platinum, palladium, copper, aluminum, so it was a broad-based sell-off. The second point, the FOMC on the previous Wednesday had said, we're not going to lower interest rates. We probably won't lower interest rates. Inflation is much more persistent and virulent than we, than most people had thought. We are worried about lower employment and higher unemployment and signs of weakening economic

3:09conditions, but we don't see an opportunity to lower interest rates significantly. And they also issued their DOP plot, which showed that they didn't really see interest rates falling sharply this year or next year. So that was a much bigger signal, I think, to the markets that, hey, interest rates are going to stay higher. And that, I think, was probably a big factor. A third, and probably more important than the first two factors, was simple, good, old-fashioned profit taking. And the fourth thing, which is really important, is that Dubai was closed. And Dubai is the Antropo, not just for the entire Gulf region in Turkey. It is the Islamic Gold Center, but it's also the Antropofer Gold into South Asia. And there are daily flights of gold scrap from Mumbai to Dubai for refining, and Gold Boyan from Dubai to Mumbai for selling.

4:17And you had a lot of people throughout the Islamic world, throughout the Gulf region, and in South Asia, who were saying, I'd like to buy gold and silver, but they're ain't none. Because the Dubai airport's closed. So I think there were a number of factors that all came together that led to that price decline. I want to bring up an interesting scenario here, and this does tie directly to U.S. Treasuries, the dollar status, and of course, even perceptions of the U.S. as a global hegemon, and how that is in the process of eroding long term. Of course, we've all been discussing this transition from a unipolar to more of a multi-polar world. But the scenario in particular is the parallels being drawn between what we see today with the Straits of Hormuz, and with the Suez crisis. To listen to this full interview, in addition to gaining access to all of our premium content during the week, go to financialsense.com and hit the subscribe button.