CPM Boss Jeffrey Christian Sees “Forceful” Rise In Silver Price Despite Shaky Industrial Demand

Photo: CPM Boss Jeffrey Christian Sees “Forceful” Rise In Silver Price Despite Shaky Industrial Demand

Jeffery Christian has a long history in the financial markets. A veteran of investment bank Goldman Sachs, he left the banking giant in the mid eighties to found CPM group, where he worked to innovate how commodities market research is done. Over the summer, he went on the record to call for a “forceful” rise in silver's price in Q4, and from the looks of it, he was right.

In the interview given with Kitco, he drew attention to the dual role that silver has in the world. Not only is it an investment metal for many people who want diversification, it also plays a big role in industry and manufacturing. The rise of green power has been good for silver demand, and today the single largest industrial use for the white metal is the manufacture of solar photovoltaic (PV) cells.

During the same interview where Mr. Christian calls for a rise in silver price, he also cites President Trump's anti-green power bias as a cause for potential headwinds in silver demand. This is of course a logical assertion, but as it stands today, the expansion of PV cell production in china shows no sign of slowing down anytime soon.

Marginalizing Trump

Even with President Trump's shift away from solar power development, PV cell manufacturers in the Middle Kingdom are expanding production. In H1 of 2017 there were more than 50k Mw of new solar production announced world wide, which is even higher than H1 2016, long before President Trump took office.

Well over half of this new generating capacity was to be manufactured by Chinese companies, so in the defense of Mr. Christian's call, he may have correctly anticipated strong headwinds for silver demand coming from US based PV manufacturers. On a global scale the US demand for solar wouldn't appear to be making a big difference when it comes to China's solar power plans, and this may be an additional boost for silver prices going forward.

Unlike the United States, China is doing everything it can to move away from the carbon-centric power base that has brought the nation to the present moment. The reasons for this shift are obvious, the population of China is tired of living under gray skies, and choking on the noxious emissions from coal power plants. Silver is a big part of the solution, and it would appear that China's PV manufacturers are giving Beijing the infrastructure they need to reduce China's dependence on dirty old coal.

A Nuanced Market

Regardless of the nitty-gritty, it would appear that Mr. Christian had the silver market lined up perfectly. Silver prices have broken out of their summer lows, and given the metal's volatility, could challenge $18usd/oz anytime. Aussie bank Macquarie recently came out in support of both gold and silver, and stated that they too were bullish on silver, even though it has been trading aimlessly over the last year.

Macquarie cite the continued weakness in the US Dollar as one of the reasons for their optimism, with heightened geopolitical tensions also adding to the supportive environment for precious metals. If you are interested in what might unfold for precious metals over the coming year, the Silver and Gold Summit is a great place to be on November 20 and 21. A number of talented metals investors will be there, with Jeffery Christian among them. It all takes place in downtown San Francisco, and we hope to see you there!