“Are we still in the foothills … or are we much closer to the mountains now? So is this the move to US$2,300 or not?” said CPM Group’s Jeffrey Christian.
The gold price surged past US$2,000 per ounce for the first time ever last week, a level that many didn’t believe was in the cards at the start of the year.
The yellow metal’s rapid ascent has left investors looking for insight on what’s been driving its rise, as well as what could be next as 2020 continues.
Speaking to the Investing News Network, Jeffrey Christian, managing partner at CPM Group, identified three main factors that he believes are behind gold’s major price increase.
“The first thing is this tremendous amount of money that has been poured into the global economy, much of it in US dollars. You’ve seen this incredible increase in money, and that money isn’t necessarily going into the real economy. A lot of it is backed up — a couple trillion dollars — in bank deposits.”
The second aspect is that banks are now wondering where to put that money. A lot of it has flowed into the stock market, according to Christian, but with concerns growing about that arena, gold has also become a depository for those funds.
“And then the third thing is the gold and silver contracts on the COMEX themselves, and this influx of short-term money into these markets,” he continued.
The gold price has now risen higher than CPM Group’s early 2020 prediction for US$1,920 gold sometime around the July to September period. When asked if the firm has a new prediction, Christian said he believes a move to US$2,300 is in the cards — the question is when that will happen.
“We thought that there were all these economic and political problems, but we thought they wouldn’t come home to roost this fast. One of the things that we’re wrestling with intellectually among ourselves is: Are we still in the foothills … or are we much closer to the mountains now? So is this the move to US$2,300 or not?” he explained.
“I’d like to believe from a position of political and social stability that we’re still in the foothills. But we may be much closer to that much more significant economic and political deluge than we thought we were.”
Watch the interview above for more from Christian on gold, including short-term trading ideas and the yellow metal’s relationship with the US dollar.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.