Interview: Jeffrey Christian - Gold, Survey - Interviews, Federal Reserve Promise?, Gold & Silver, More on U.S. Housing Foreclosures

Interview: Jeffrey Christian - Gold

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 On August 4, 2011 I had the opportunity to interview Jeffrey Christian of New York based CPM Group. By reputation he is a world authority on the precious metals and commodities markets, and at various times has advised the International Monetary Fund, the United Nations, the World Bank, many of the world's largest mining and industrial companies, investment banks, and both institutional and individual investors.

Jeff founded New York based CPM Group in 1986, and is its Managing Director. CPM Group is a commodities market research, consulting, asset management, and investment-banking firm. It has for over 20 years delivered unique, market-leading commodity research and related services to clients ranging from individual investors to leading international organizations. CPM Group recently released its annual Gold Yearbook 2011 and its Silver Yearbook 2011.

I met Jeff over two years ago when I visited him in his New York office. I believe him to be a bright, independent, and objective thinker who does not hesitate to disagree with those whose views differ from his. That said, he listens well, thinks through his positions, and doesn't 'disagree to disagree'. From my perspective Jeff is the very sort of person whose views ought to be listened to, and thought carefully about. I recommend you take the time to listen to the four parts of this interview, which range in length from 7 - 15 minutes.

My interview with Jeff is divided into four (4) parts. In Part 1 of this interview Jeff answered questions with respect to world economic matters as he saw things on August 4, 2011. Parts 2, 3 and 4 of this interview cover his current views on physical gold, physical silver, and copper respectively. Each of my e-mails this week will include one part of my interview with Jeff.   All four Parts of this interview will continue to be available after Friday on StockResearchPortal.com.

Today's interview dealing with gold is about 15 minutes long.

After the North American markets closed on Monday I again interviewed Jeff to give him an opportunity to express updated views to August 8 (following the close of the North American financial markets) with respect to the S&P U.S. Credit downgrade and (in turn) world economic matters, gold, silver, and copper. This second interview, now available on StockResearchPortal.com can be listened to here - listening time 15 minutes.

Survey - Interviews

Federal Reserve Promise?

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 An article yesterday afternoon titled 'Fed to keep interest rate near zero for 2 years', sub-titled 'Fed says it will likely keep key interest rate at record low for 2 more years' - reading time 3 minutes - reported on yesterday's Fed meeting. You might want to read the Fed's Press Release to satisfy yourself you are reading 'horse's mouth' information - reading time 3 minutes.

The Press Release does not say 'Fed to keep interest rate near zero for 2 years'. It says that the Federal Open Market Committee yesterday decided "to keep the target range for the federal funds rate at 0.00% - 0.25%" and that "the Committee currently anticipates that economic conditions ..... are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013" (underlining added).

How anyone can conclude on the plain words of those direct quotes that the Fed funds interest rate is certain to remain at the current 'target range' for the next two years is beyond me. Rather, these Fed statements say to me that the Fed will support interest rates at any given point in time in the next twenty-four months based on its assessment of things at that point in time. For the Fed take any other position would be irresponsible in my opinion. Yet the Dow went up by 430 points (3.98%) and the S&P 500 went up by 53 points (4.74%) in the aftermath of the Fed's statements - when nothing else of consequence that was 'new' that I know of 'made the economic news' yesterday. From my perspective the (at least American) equity markets are simply proving day after day that they are more schizophrenic than they are logical.

Gold & Silver

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 An article published last Friday, the day after what I may be the first to label last Thursday's equity market's performance as 'Grey Thursday', this past Monday surely being labeled by people in the investment business as 'Expletive Monday', titled 'Gold, Silver Decline as Equity Rout Spurs Sales to Raise Cash' - reading time 3 minutes - attributed Friday's physical gold and silver price volatility to a requirement of investors to 'raise cash'. On the face of things, I think this is nothing more than one commentator providing what I assume to be antidotal evidence without specific statistics that support the position he takes.

That said, as best I know there is evidence to suggest that one significant reason the equities market dropped as they did in late 2008 had to do with the margin positions that had to be made up at any cost by some equity market participants. Personally, since I can speculate as well as those quoted in the referenced article, I doubt the gold price volatility last Friday had much of anything to do with large numbers of holders of gold and silver selling some or all of their holdings to raise cash to "cover losses in other markets". Some investors, maybe, but I can't believe enough of them to be a principal cause of, as the article says, "gold (falling) for the second straight day on sales by some investors to cover losses in other markets". Gold of course has now more than recovered what it lost on Friday, trading last evening ET at about U.S.$1,760 as I write this. Silver has not increased in price in the past few days by nearly so much.

That said, if persons holding physical gold and silver were indeed selling their holdings to raise cash to cover losses on other investments, they certainly weren't doing that on Monday when the gold price soared, and the silver price held its own. Have you noticed how almost no commentators write follow-up articles? 

More on U.S. Housing Foreclosures

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 An article last Friday titled 'The 15 Cities Still Getting Crushed By Foreclosures' - reading time 5 minutes - included a short article and a PowerPoint Presentation. In summary, RealtyTrac, a leading U.S. real estate 'data accumulator' claims that foreclosure activity has decreased in 178 of 211 U.S. metropolitan areas in the first half of 2011, although 1/111 U.S. housing units were foreclosed in that six month period. That said, the 15 highest foreclosure 'areas' are summarized in the following table.

I am not an expert in U.S. Real Estate matters. That said, from what I have read the on-going 'foreclosure documentation issues' that were tabled in the fall of 2010, combined with what may be a reluctance of U.S. Banks to foreclose when they can leave people in their houses and have those people continue to maintain them, may have influenced a reduced foreclosure rate in the six months ended June 30. If that was the case, then to say 'foreclosure activity was down' in that time period may not mean very much, if anything. Something to think about.