Black swan events like the coronavirus are by nature unpredictable, but Christian said it’s not impossible to be ready for them.
Investors should be looking to gold and silver’s safe haven nature in the current environment — that was the sentiment CPM Group’s Jeffrey Christian expressed at this year’s Prospectors & Developers Association of Canada (PDAC) convention in Toronto.
“It is to some extent an anomalous activity,” Christian said of the economic volatility that has rattled markets since mid-February.
“But you can look at history and see anomalous events occur with regularity,” he said. “There’s a 100 percent chance that we will see a recession, in fact a bunch of recessions, in the future.”
For the the managing partner of CPM Group, the better question is how impactful the recession will be and how governments will react.
“You can prepare for unforeseen circumstances by saying, ‘I have to be prepared for unforeseen circumstances,’ and one of the things you do is you diversify your portfolio.”
In terms of diversification, investors should look to the precious metals, specifically gold and silver.
While some analysts have compared the current environment to that of 2008, Christian sees more similarities between today’s volatile conditions and the economic indicators of 2001, when SARS was first reported, although there is another period that Christian believes is more comparable to now.
“What we keep saying is the similarities are really to the late 1920s, early 1930s, which is much more worrisome but a longer-term issue,” he said.
The analyst sees the COVID-19 coronavirus continuing to be the main driver for gold throughout Q2, and beyond that he said a key motivator will be gold’s use as a diversifier against the stock market.
When asked what may impact gold later in the year, Christian pointed to Brexit fallout, the US election and the growing role geopolitics plays in markets.
Watch the video above to hear more from Christian about gold’s trajectory for the rest of 2020. You can also click here for our full PDAC playlist.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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