For decades, myths have dominated the gold and silver conversation — from “the great reset” to “secret central bank gold hordes.”
In this episode, Jeffrey Christian of CPM Group joins CEO Keith Weiner of Monetary Metals to separate fact from fiction in the precious metals market. Together they unpack the hype, misinformation, and half-truths that fuel the internet’s obsession with fantastic price predictions and gold and silver conspiracies.
From the $500 silver myth to the fantasy of a gold-backed yuan, this episode brings you clear-eyed analysis, data-driven insight, and decades of experience to show what’s really moving gold and silver.
If you want to understand how the metals market actually works, this conversation is a must-watch.
Follow Monetary Metals on X: @Monetary_Metals
Follow CPM Group on X: @CPMGroupLLC
Follow Keith on X: @RealKeithWeiner
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Transcript
Monetary Metals:
Welcome back to the Gold Exchange podcast. My name is Ben Nadelstein of Monetary Metals. I am joined by our first guest, someone who’s been at the center of precious metals research and analysis for decades. That’s Jeffrey Christian, managing partner at CPM Group. Cpm Group has a reputation for being one of the most data-driven, disciplined voices in the metal space. They are not paid to be bullish. They’re not paid to be bearish. They’re simply paid to get it right. Jeff and his team have spent years cutting through the noise and challenging some of the most magical thinking that can dominate gold and silver conversations, like the idea that prices are going to suddenly skyrocket or suddenly crash. His perspective often brings hard data, historical context, and clear-eye analysis of what can often be an emotional market. As well, our second guest, CEO and founder of Monetary Metals, Keith Wiener. Keith is an economist, entrepreneur, and expert on all things gold and silver, and of course, always ready to challenge conventional thinking when those concepts are leading investors astray. So let’s dive directly in. And Jeff, I’ll start with you. Many narratives around gold and silver often rely on emotions or hope, and not really supply and demand, not really fundamentals.
So let’s start just by asking about this whole idea that once silver prices break $50, or once gold prices break $4,000, they’re going to go ballistic. Prices could double, they could triple. Silver could go to $100 or even $200. Can you walk us through why these price breakouts to a $50 or $4,000 mark, they don’t necessarily lead to a runaway market?
Jeffrey Christian:
There’s a variety of reasons. And the fundamentals actually matter in gold and silver markets. It’s one of the fundamentals, and the key fundamental in terms of price determination, is investment demand. You can go through the fundamentals of silver. Let’s stay with silver and $50. Why $50? Well, Well, because it touched $50 or it almost touched $50 in January of 1980. Then it fell down. People don’t realize that it hit $50, and there were fundamentals that kicked in, which I’ll talk about in a second. Within three months, it was $16. In 2011, it came up almost to $50 again, and within five days, it was $32. There are certain Economics, economics, and fundamentals. First off, the most important one is investment demand. You have investors owning several billion ounces of gold, silver. It’s more than 2 billion ounces of silver that are owned by investors. It probably is closer to 4 billion. When the price goes from $22 at the start of 2024 to $50 today, it didn’t get to 50, I don’t think, but Two days ago, it was… Well, yesterday, the intraday price was $49. 96. 5. We were like three and a half cents from $50.
At that level, some investors say, I want to take profits. In fact, silvers lag gold for the last two years or so, partly because when it got to $28 and then $30 and then $32, at each stage, you saw investors selling silver, a lot of silver. Other investors were buying more silver, but you saw investors taking profits or recouping their losses because there were investors You had investors who bought silver at a high price in 2011, and they’ve held it until now at a loss, mark-to-market loss. You had other investors who bought into the scam, the Wall Street Silver Drain, the Comex inventory scam in 2021 at $30, and then you add the coin premiums, and they were buying it at $35 and $40. They’re now able to recoup their capital. You’ll see investors do it. Now, investors aren’t going to sell all 4 billion ounces, but some portion of investors will. The silver market, We’re sharply higher prices today than we were two years ago because investors bought net about 70 million ounces last year, and they’re probably going to buy about 130 million ounces net this year. It’s a much smaller market than that 4 billion ounces.
If 1% of that comes out, that’s 40 million ounces, and it has a major effect on the current supply and demand balance. The first fundamental that serves as a break around $50 is investor selling and profit-taking. Secondly, you look at scrap recovery. You have tens of billions of ounces in jewelry and decorative items and silverware and sterlingware and religious objects. I have behind me a sterling silver Ganesh that was a present in India, it’s exactly 10 ounces. And it’s exactly 10 ounces because while it’s a statue to a Hindu God and it’s a wonderful decorative object, it’s also an investment. And anybody who owns a 10 ounce Ganesh knows it’s got 10 ounces of sterling silver in it. So you have a lot of scrap that can come in when the price spikes higher. You also have a lot of mine production. And You have a lot of silver that is able to be mined profitably at $30, $40, $50 an ounce rather than $15 or $20 an ounce. You’re starting to see a lot of mine production. We have something like 20 billion ounces of minable reserves on a worldwide basis that can be developed, and that’s at a lower price.
You’ll see mine production grow. You’ll see fabricators across the board look to either reduce their per unit silver use because it’s more expensive now, or substitute away from silver to something else. You’ve got mine production, secondary supply, fabrication demand, and investment demand. At $50, the economics of silver have changed dramatically from $30 or or $28. And so that’s it. There’s this, as you use the term magical thinking that, Oh, once we break over $50, which was briefly seen. I mean, in 1980, I think silver was around 49, 50 for something like five minutes. And in 2011, it was about 20 minutes. And there’s this belief that has nothing, no Nothing empirical to support it, that, Oh, once we break over 50, everyone will buy and everyone will stop selling and the price will go quickly to 75 or 100 I’ve heard people talk about $750 and $2,000 ounce. But that’s not the economics of silver. Silver is a financial asset, but it’s also a commodity.
Keith Weiner:
If I can just jump in for one moment. I think you were there, Jeffrey, when it happened, but I certainly heard many stories of people who wanted to sell their silver and were desperately calling their brokers, but the phone lines were jammed. This is before the Internet, obviously, in 1980. Nobody could get through to sell it during that peak. By the time they got through to sell, it could have been $37, who knows what. The other anecdote I have, which is today, one of our upstream counter parties that we deal with put out an announcement that they’re not buying silver products today.
Jeffrey Christian:
Scrap.
Keith Weiner:
No, not scrap, like bars and coins.
Jeffrey Christian:
Oh, really?
Keith Weiner:
They don’t want to do that, or at least not on the fix. I’m not sure the exact wording of the thing, but market conditions, blah, blah, blah, blah, blah, blah, blah, we don’t want to take the risk. There’s a refiner that issued an announcement this morning that they’re not buying sterling silver or silver scrap anymore because the refinery is so backed up with bullion and bullion medallions to be refined that they’re just backed up.
Jeffrey Christian:
There’s been so much metal sold.
Keith Weiner:
Now, hedging is also a problem. I was going to say our indicator of supply and demand is the basis and co-basis. You have 50 cents of backwardation in the December contract, as we measure it yesterday, which is notable. Normally, I do these contracts plumb as you get into expiry, but here we are in October ninth, yesterday. That’s a little bit early for that to be backwardated at 50 cents as 1%. That’s a big deal that There’s some things going on in the market. There’s a shortage of metal at the moment. But now, if you’re a refiner and you’re buying that metal and you want to hedge it, now you’re looking at… The primary market for hedging it would be a Comeex future, and you’re looking 50 cent discount. That may be unattractive as well. That may be greater than your total refining margin that you’re going to potentially lose on the hedge. All kinds of weird things going on in the market right now.
Jeffrey Christian:
Yeah, I’m just looking at the price deck right now for Comex Futures, and I don’t see a 50 cent backwardation.
Keith Weiner:
Well, I’m comparing spot to December, not December, to to March. Most people are comparing near to next. I’m comparing spot, and we have our unique proprietary way of doing it. It really makes it much less noisy than just trying to compare two things on a screen. But anyways, that’s very notable because I’m trying to think of the last time when I’ve seen backwardation in silver. It’s been a while. This is very notable. In general, the cobasis has been rising as this price move has gone up since September.
Jeffrey Christian:
To play the devil’s advocate, and I know that there are people who spit at me for saying this, and I’ll explain that in a second. The price is $48 an ounce, $47 an ounce. To give up 50 cents to lock in $47 or $47. I’m looking at deck right now, $47. 38. To give up 50 at these levels, it’s painful. But let’s be realistic. Whatever you’re hedging, you haven’t seen it at $47.
Keith Weiner:
But if you’re the refiner, if you’re buying it today, you’re buying it today to refine it and sell it as a refined product, you’re making a little spread. That spread, it could be less than 1%. So your cost of hedging is greater than your gross margin. That doesn’t work.
Jeffrey Christian:
But most fabricators actually lease their metal in. So they won’t price it until they actually ship their product.
Keith Weiner:
But if they’re leasing it, then they don’t have to hedge. But the hedging market is suddenly not expensive.
Jeffrey Christian:
But I do know that refiners and fabricators and investors and others, when you start saying, Let’s be realistic. What’s it paying to give up 50 cents at these record levels? They say, It’s 50 cents, Jeff. They don’t want to give up anything. They expect- Not if they’re working on a tight spread.
Keith Weiner:
If you bought it at 20 bucks, now you’re thinking of hedging a little bit. Yeah, sure. Fine. Whatever. 50 cents. If you’re a refiner and you’re working on these or thin margins, a whole It’s a whole different story.
Monetary Metals:
All right. I got another question for you. So, Keith, oftentimes you’ll hear there’s only a limited supply of gold. That’s what gives it its value. What do you think about this idea that supply and demand gold are a little bit different than other commodities, where what gives gold value is its tight supply? What do you think about that?
Keith Weiner:
I’ve said many times, and the thing that led to me saying to Jeffrey, Hey, would you join us on the podcast? Was, how do you calculate the stocks in gold? We had a fascinating conversation at the India Gold Conference a couple of weeks ago. But how you calculate it, the amount of gold that’s out there in human hands is decades’ worth of current production rates, whereas any normal commodity would be typically months. That ratio of stocks, which was total inventory, is divided by, let’s say, annual production, which is flows, and gold is decades and anything else. Silver also would be along stocks of flows, but and anything else months. All of that gold, and this is the point I think that Jeffrey made just a minute ago, but in different terms, all of that gold or all of that silver This is potential supply at the right price and under the right conditions. To say that X amount of ounces came out of the minds this year, which is true enough, but to treat that as if that were the sum total of all supply is missing the giant elephant in the room to focus on the toenail of the mouse in the corner of the room.
Monetary Metals:
So the example there would be my dad’s a dentist, he’s a gold investor, and then one day he looks on his screen, Oh, my goodness, gold is 40,000 $1,000 an ounce. He’d be getting pliers and ripping gold out of his teeth, selling his crowns just so they can get some $40,000 gold. And obviously, when you throw that on the price, suddenly the price lowers.
Keith Weiner:
I was going to make a comment about the 10-ounce statue of Ganesh sitting behind Jeffrey on his desk. All of these, whether it’s silverware, tea services in silver, objet d’art in both gold and silver, all of those things, jewelry for that matter, it’s only one trip to the refiner away from being bullion again. Virtually all the metal that’s there is bullion within one trip to a refiner, and refiner is making well under 1% margins on. It’s cheap to do. It’s easy to get it to a refiner. All that metal is supply, maybe not gold fillings in living people, but almost all the other gold and almost all the other silver, to a lesser degree with silver, is all recyclable relatively quickly and relatively cheaply. I really wanted to get it… Sorry, go ahead.
Jeffrey Christian:
I was going to elaborate on that last point that you guys were talking about. You’re both right. Keith is right that there’s an enormous inventory of gold and silver relative to supply and demand, and that’s in sharp contrast with any other commodity. The difference between a bull in a bear market in copper or nickel or aluminum is the difference between having four weeks or six weeks’ worth of inventories, whereas with gold and silver, you have years, if not decades of inventories. From that perspective, there are these large inventories. But that said, Ben, you were right, too, because gold and silver are financial assets, and they trade like financial assets. They trade actually like the Japanese Yen in many ways. When you To compare the value of all of those inventories of gold and silver to the amount of financial assets, that’s where you see gold and silver are limited in supply. That’s what makes them valuable to investors is that it takes very little of investment money to come into gold and silver to drive gold and silver prices sharply higher. Because while there’s a lot of relative to other commodities, relative to the stock of money and financial wealth, gold and silver are very small markets.
Monetary Metals:
Jeff, now I want to ask you a question about actual or real-life use cases or industrial use cases of these different metals. Often, you’ll hear bullish promoters of silver prices saying, well, soon, solar panel demand is going to use up all the silver, or there’s going to be a new war, and this is going to use all the silver in these missiles, or you’ll hear something like AI, these chips, they all use silver, and soon with the AI boom, there’s going to be no silver left making the silver prices spike. What do you say to these people who say the industrial uses of silver are going to soon overtake the actual amount of existing supply and silver prices will skyrocket?
Jeffrey Christian:
It’s probably not going to happen for a variety of reasons. And one of the things I touched on earlier is when the price of silver rises, fabricators look to either reduce their per unit ultimate use of metals or substitute away. Silver is somewhat substitutable to things. I like to tell the anecdote, 1979, when the gold and silver prices started rising, I actually called IBM, and this was prior to the… I mean, desktop computers were just being introduced. So computers were basically mainframe computers. I called up IBM and I started to talk to them about the price of gold and whether they were going to be cutting back on their gold and their contacts and connectors. And they said, No, the price of gold is minuscule compared to the value of the product, which actually was what my dentist said when I mentioned $50 silver. He said, Jeff, compared to what I’m charging you for this filling, the silver is meaningless. And I said, okay, fine. But I knew that the contacts and connectors that IBM was using were made by GTE, Pennsylvania. I called up the metals procurement officer there, and he said, We actually shifted from gold to palladium in 1975, ’96, after gold prices had risen in 1973, 1974.
They’re actually using gold-plated palladium already. The substitutability and the reduction in per unit is there. And that applies across everything. So if you look at solar panels, which a lot of people have been talking about, in solar panels, you can reduce the per unit use, and you can go to other materials, and you can go to silver-plated copper and reduce the amount of silver. So there are things that you can do and will do if the price becomes uneconomic for you to use in your products. In addition to that, you’re already seeing solar panels reach their end of their useful lives and being recycled, and the silver is being recovered. It’s funny because you’ll hear people say, No one can recover that profitably. But I have half a dozen customers who are in the recycling business who are taking in solar panels. I guess they’re doing it out of charity and losing money every time. I don’t think so. There is recyclability that can come, and there is substitutability. Silver is the cheaper precious metal, so often it’s the metal that you substitute to, but copper is there behind silver. That’s one thing in the solar panel, and I know that a lot of promoters have said, Oh, you’re going to be using 600 or 800 million ounces of silver in solar panels.
The solar panel industry thinks that they’re going to be using 250 or 300 or maybe 350 million ounces a year, some of which is recovered. If you go back to the period prior to late 1990s, when photographic use was the major use of silver. A lot of people said, Boy, if we go to digital imaging, we’re going to lose 250 million ounces of silver use. But the reality is that the Silver use in photography was different from solar. I’ll explain that in a second. Well, no, I’ll explain it now. In solar, you have a product life of 20 or 30 years right now. Estimate it. In photography, half of the silver that went into films and papers came back within a year. You might have had annual new use on a gross basis of 250 million ounces in photography, but you had a net use of about 125,000 ounces because half of it came back in fixative that had silver content and was recycled. When you moved to digital photography, you lost half as much silver demand as you thought you did on a net basis. There are all kinds of things that come in to economic realities.
There’s a lot of hype about silver in missiles. Most of it’s nonsense. We’ve done some work and we’ve estimated… Well, we have two things. First off, we have insights and intelligence as to how much silver the military use on a gross basis. But we also have information on per unit use of Silver in torpedoes and Silver in missiles. In torpedoes, it’s very interesting because, torpedoes haven’t been used in an actual action for decades. They’re used in practice. And so you do lose some of that silver. But the batteries in the torpedoes get recycled so that they’re fresh on a regular basis, and the silver gets recycled and recovered and put into new batteries. With missiles, you use them once and they’re gone with torpedoes, and we’re using a lot more But it’s like five ounces per missile, not 50 pounds or anything like that. There’s a gross overestimation of how much silver is being used in missiles by people who want to believe that the silver is disappearing. I think you mentioned a third use out there, too. But the reality is that silver is a commodity as well as a financial asset, and fabricators will pay attention to the price.
Monetary Metals:
Keith, I know we talk about this often, this idea that silver is being used up, right? People don’t really use up gold. It just stays there forever. It doesn’t rust. It doesn’t really ever go away. But hey, if there’s silver in the missile, that silver just is gone or it explodes, or whatever. So what do you think about this idea that these stocks of silver are slowly going away, that silver becomes more of an industrial metal? Do you think that is really not the case? And silver remains a monetary metal because of these different supply and demand dynamics.
Keith Weiner:
First thing I was going to say, to add to Jeffrey’s point, is that as long as I’ve been in precious metals, which is late 2008, the silver supply deficit story has been endlessly hyped. So it’s going back at least 17 years that I’ve personally witnessed. And the sense that I got in 2008 is that was already an old story that went back to at least the 1990s. But I don’t have the personal history with it to know how far back that rumor has been mongered. But I’m sure at least 1990s, maybe, Jeffrey, you could say 1980s or 1970s.
Jeffrey Christian:
The ’90s is right.
Keith Weiner:
’90s? Okay. That’s the first thing. This is an old, old, old story. With something that old, you think, well, if it were true, it would already have come to pass and all the predictions based on it would have already happened. Here we are, not yet quite breaking a high nominal, not so-called inflation adjusted. Set in 1980, 45 years ago, almost 46 years ago, if that was January 1980. That’s the first take that I have to make on that. The second is, I say to people, be careful what you wish for it, because what you’re saying is if all the silver is being consumed, essentially the industry is outbidding investors, I don’t use the term investors, so people hold metal, but to use that term, if industry is outbidding investors and all the metal down and consuming it, that is in effect, the demonetization of silver. If you want to hold silver for a monetary purpose, that would not be what you’d want. That’s the opposite of what you’d want. Then secondly, so that would make silver like a junior brother to platinum and palladiumium, rhodium, et cetera, more volatile and just bounce around with the wins.
Now, what I can say is that if you look at the price of silver and say, How does it trade? Jeff, I agree with you that it trades as money, it doesn’t trade as oil or cotton or something like that. As much as the gold-silver ratio can move around and diverge, silver is much more tightly correlated to gold than it is to copper, let alone any other commodity. I think the proof is the pudding. It’s not demonetized yet. Could it happen? Maybe. There’s arguments for why the world doesn’t need two monetary metals today, and for the reasons that existed historically in the 16th century or whatever. That today, technology allows us to purify and manufacture gold in much more precise units. Plus, there’s digital gold. That the need for a smaller denomination metal, as it were, isn’t the same today as it was then, perhaps. Perhaps maybe that’s a theoretical argument, but the proofs and the pudding hasn’t happened yet. Silver is still trading as a monetary metal and not as an industrial commodity.
Monetary Metals:
Jeffrey, now I want to ask you a question which has been on my mind for a while. What about all of these stories you hear about gold going missing? There’s a mine in South Africa, and they don’t really report how much gold they get out. Or there’s gold on board a ship hundreds of years ago, and it all went missing into the bottom of the ocean. What do you think about these facts that all of a sudden, there’s going to be this new supply of gold to the market? It’s going to shock the gold market. Oh, my goodness. All this gold that’s been missing for thousands of years, or hundreds of years, suddenly comes online. What do you think about these myths in the gold market? Do they have any truth to them? Do they really matter?
Jeffrey Christian:
All myths have a kernel of truth in their center. Then the myth is built up around that. First off, I don’t know about South African mines that don’t report their gold. I do know that there are other mines that are privately owned. So part of the problem is if you look at any commodity, but let’s stay with gold and Silver. If you’re an analyst and you say, I want to collect data, mining companies, mostly are public companies, they have financial market regulators who say, You They have to disclose all this information. They have a economic interest in disclosing that information because they want to convince investors to buy their stock. But there are some private mining companies, and there I know there’s a mine in Namibia, Navichab, I believe is the name, and it used to be owned by a South African mining company. It was sold to a private investor group maybe 10 years ago, maybe longer, at which point the private investors redeveloped the mine, doubled the output, and didn’t report it because they were a private company. If you look at the public data that’s collected and used across the precious metals mining industry, you saw a 200,000-ounce decline in Namibian mine production in the reported data that the collectors, the aggregators, only look at public companies.
Meanwhile, production went from 200,000 to 400,000 ounces. So you actually had an increase in production, but a decrease in reported production. Then you get into secondary supply, and it’s all secret, and fabrication, demand, investment. In terms of mine production, there are private mining companies. One of the big pushes since around 2000 has been privatization and the growth of private equity. That is very detrimental across the economy because it makes economic trends more opaque because private equity doesn’t report. I was a very strong critic of the growth of private equity 25 years ago, and I still am. Some private equity companies are extremely well run. A lot of them are terribly run, but that’s beside the point. That’s the South African thing. In terms of the gold lost at sea, gold and silver. There’s a lot of gold and silver that’s lost at sea. The ships, each ship, didn’t carry a lot. I have a book here on lost treasures and all these ships. I’ve actually worked with people who were doing recovery of old Spanish and Portuguese and Dutch and British gallions that had gold and silver. You will see that every so often. There was one earlier this year that’s recovered.
It’s like 10,000 ounces. It’s not enough to move the needle in terms of total supply. The really interesting ones are the gold trains after World War II. After World War II, the Allies were collecting Nazi looted booty. There were various trains, not just with gold, but they had gold and currencies They had antique furniture, some of Marie-Antoinette’s furniture, paintings, rare paintings, all kinds of stuff. This stuff was all collected in various places across Germany and Austria and other parts of Europe that the Nazis had occupied. It was put on trains to Vienna, where the Allies were collecting it all. There were reports that some of that stuff disappeared, and there were credible reports that some of that disappeared. Maybe 20 years ago, there was a commission put together to study what happened to the gold trains. It was run by a person that I had worked with earlier on the gold commission under Ronald Reagan. They They came out with a report and they said, We found the gold train. Here’s what happened to the gold train. The gold train went to Austria. This is what was on it. And they said, There. Concluded. But to my knowledge, from way back when, there were three gold trains.
So two trains were still unaccompanied. Now, I think that there were some significant volumes of gold on at least one of those trains, based I’ve done some research I did back in the ’70s, which has never been accounted for. I have my suspicions where it is. It’s not that great. I’ll tell you another anecdote. Back in the Soviet era, we used to have estimates of how much gold we thought the Soviet government had, and it was about 67 million ounces. In the late ’80s, well, in the late ’70s, China joined the IMF. Once you joined the IMF, you to report your gold monetary reserves. China reported that it had 12. 3 million ounces of gold in its monetary reserves, late ’70s. Late ’80s, Russia joined the IMF, and they reported they had 12. 9 million ounces more than China. At that point, we were doing a lot of work with various Soviet offices, and the people that we were working with said, Jeff, were going to join the IMF, and we’re going to join the IMF, and we’re going to report that we have 12. 9 million ounces of monetary reserves. I said, Oh, my God, because we have like 67 million ounces that we estimate.
He said, No, we have to report our monetary reserves. The government of the Soviet Union may have other reserves, but these are the monetary reserves, which are, of course, please note in your report, Jeff, larger than China’s. That was like 1987, 1988. 1991, the Soviet Union collapses. The other 14 republics say, We want our share of the monetary reserves. And the Russian government says, Okay, 12. 9 weighted by your percentage of Soviet GDP, you get 500,000 ounces, you get a million ounces. And one of the central banks retained us and said to the Russian Central Bank, According to CPM Group’s data, you have 67 million ounces of gold. We want our share of 67 million ounces, not 12. 9. At which point, the Russian Central Bank said to them, You got your share of the monetary reserves from us. If you want your share of the rest, go talk to the Red Army.
Monetary Metals:
Wow.
Jeffrey Christian:
Now, the interesting thing is, the Red Army doesn’t seem to have been selling gold over the last three years to finance the war against Ukraine. They’re letting the government finance it.
Monetary Metals:
Keith, I want to ask you specifically on that front. We hear lots of rumors about central banks buying gold. They may be purchasing gold in secret, or that the Russian central bank are working on a gold-backed ruble. There’s all these secret or almost conspiracies that people will soon announce a gold-backed Yuan, a gold-backed ruble. What do you think about the fact that there’s potentially secret hordes of gold that will be used to link a gold currency that will soon displace the dollar. What do you think about these ideas?
Keith Weiner:
This is Gelman Amnesia. The idea that people forget that on page one of the newspaper, something’s idiotic, and they credulously read page 2. You find a quote by Michael Crichton, who said, he was talking about these stories that say, wet street causes rain. They get things exactly backwards. I wrote about this so-called Russian gold-backed ruble. Back when this happened, was this 2021 or 2022? The ruble suddenly caught a bid and everything else. What it was they said, We’re going to buy all the gold produced by the Russian goldmines at 5,000 rubles per ounce or per gram or whatever it was. That was actually under the market. This wasn’t an attempt to create a gold backed ruble. This was an attempt to loot the gold miners by forcing them to sell it at under market prices. Putin, it turns out, was not being an altruist. He was actually being the looter that you always knew he was, and he was looting his own gold miners, as is often the case in messed up, backward countries.
Economically, you can’t retroactively declare a currency to be gold-redeemable. A redeemable currency is one that begins life as a gold deposit. Someone deposits an ounce of gold, gets a $20 bill. Later, he has the right to redeem the $20 bill and get the ounce of gold. But if you printed all this currency out of thin air to use the current parlance, it’s just a price-fixing scheme. Scheme. If you get the price wrong, and of course, the real price will be moving around, and when the real price is higher than the price fixed by the central bank, then everybody will redeem it until they pull all the gold out and bank runs dry, or they just declare that we’re repricing it. That’s no gold-backed currency. That’s just a temporary price-fixing scheme. I want to get to a topic, and this was really the impetus of me saying that I thought it would be cool for Jeffrey to come on the We were talking, this was in India, this was in Delhi, what, three weeks ago now, Jeff? About the estimate of 206,000 or 209,000 tons and where that came from. Jeff, you were involved in some of that, and you know the folks that developed all that.
Essentially, as I recall what you said, there were two components of it, which is industrial era where the reporting is pretty good, and you can estimate pretty accurately. Then there’s the pre-industrial from antiquity to call it 1800 or something, where there was an estimate. I was really keen to hear about that because that feeds into whether gold really has as high as stocks to flows as I might think or not. You said a lot of interesting things, and I was like, Let’s get you on the podcast if you’d be willing to talk about all that stuff. I really want to hear your thoughts if you’re willing to share.
Jeffrey Christian:
You’re talking about the amount of gold that is estimated to have been mined throughout history and where it went.
Keith Weiner:
When we say there’s 206,000 tons today, a component of that is the pre-industry, like from antiquity to 1800. Then the other component is industrial era through present, which I think we all agree is much easier to measure because you get better and better records, better and better, more accurate production methodologies. But from antiquity Nobody knows exactly when that starts. I used to say it was 5,000 years. Then last year, I don’t know when this discovery occurred, but I read about it last year, there was a cave in Bulgaria, and they found some warrior king that was buried with seven and a half kilos of gold dating to 4,500 BC, 6,500 years ago. The gold was ceremonial in nature. Clearly, they valued gold 6,500 years ago. I assume gold wasn’t the first time in people started valuing gold. It’s been valued for millennia before really recorded history up to 1800. How do you measure that and how accurate? Is that just a wild ass gas or is that reasonably accurate? You had some interesting things to say to me in India when I asked you that.
Jeffrey Christian:
I don’t remember what I said. That was interesting then, but you’ll correct me. But look, yeah, gold predates 5,000 years or so. When I started in this business, there was some data, mostly compiled by some professors in South Africa, that estimated how much gold was produced and around as of 1800. It wasn’t just a wet finger in the air. What happened was you had gold being mined everywhere, and there was gold accumulated in Europe and Asia. China was the wealthiest city on Earth 3,000 years ago. And there are some estimates as to how much was mined. In Europe and Asia. Then the real mother load was the age of conquest, when Portugal, then Spain, then the Netherlands, and then Britain all came over and colonized the Americas. And there was tremendous amounts of gold and silver stacked up in South America, and to a lesser extent in North America. That was plundered. And when that was plundered, like all good colonists, they kept good records, and they were shipping it back. And yes, some was lost at I see, but there were manifestsests, and you saw volumes and weights of gold and silver being shipped from the Americas to Europe, gold and silver.
The people who compiled that pre-1800 data made a seemingly accurate assumption that a lot more gold came from the Americas to Europe than had been accumulated related prior to that in Europe. There were some pretty good numbers as to the volumes, both for gold and for silver. Interestingly, England had a bimetallic monetary system. Other European countries had a gold-backed monetary system or actually used gold coins for their money, their currency. They had all this silver, and they knew they could take it to England and exchange it for gold, which led to run on the gold at the Bank of England, which led to various other things, including England and other European colonies using their gold and silver to pay for things they wanted to import from Asia and other parts of the world, which is where the billion ounces of gold estimated by the Indians to be in India came from, and China, and South Korea, and the Philippines, and Japan. There is this record of pre-1800 gold. But that said, I think off the top of my head, it was about 5 billion ounces estimated that it had been mined prior to 1800. By 1800, you had the mining industry becoming much more organized, and in many cases, ultimately, over the course of the 19th century, publicly listed companies.
They kept much better records. The records since 1800 are much better. We have in our database, I don’t think we put it in our gold year book anymore. We start at 1800 with 5 billion ounces, and then we have mine production, and then we adjust the fabrication demand and secondary supply and all that stuff. But we have mine production since 1800 every year, going up to the where we now have 6. 6 billion ounces, which is your 206,000 tons, whatever it is. We feel pretty comfortable with that number. I got my I got my decimal point wrong, but let me pull up the gold year because we have that number in there, and I believe it’s even tagged with one of these yellow things. Yeah, it’s 6. 3 billion ounces that we estimate through last year, of which… Oh, man. Yeah, it’s not even 500 million ounces. It’s 6. 2 billion that we estimate has been mined through since antiquity, and it was only about 200 million ounces. That that we have for pre-1800.
Monetary Metals:
So Jeff, if I’m understanding that correctly, basically, because when we’ve had greater accurate reporting on mining, we also are correlated with the ability to mine more gold, deeper gold, maybe better purity, better purification techniques. And pre-1800, yes, we were getting lots of gold, but relative to the amount that we have now, part of the stock or the total gold inventory pre-1800 gold is a pretty small amount.
Jeffrey Christian:
It’s very small. Yeah. It’s like three %.
Monetary Metals:
Very interesting. So Jeff and Keith, as we come to the end here, I want to do a rapid fire round with you. But first, Jeff, did you want to hit on this idea that soon in the United States, there’s going to be a big reset. We’re going to use our gold, we’re going to get rid of the national debt, and all of a sudden, all of America’s fiscal and monetary problems will be gone. All we have to do is reset the price of gold. Jeffrey Christian, what do you think?
Jeffrey Christian:
It’s a total joke. I mean, Keith spoke very eloquently. You can’t just say, Oh, I’m going to say that the price of gold is $40,000, and I have 261 million ounces of gold. The only way you can set a price is if you’re willing to be a buyer and a seller, right? And if the US Treasury were to say, We’re going to reset the gold price, pick a number, $20,000 $2,000. The only way that price is real is if it’s willing to buy at $20,000. Everybody who’s bought at prices below $4,000 is going to say, Okay, here’s my gold. Give me $20,000. Dollars. The whole idea of a reset is just a joke. It wouldn’t work as Keith explained earlier. Unless you’re a buyer and seller, you can’t set the price of gold.
Keith Weiner:
Now, there’s an asymmetry there because, of course, they can print the dollars to buy as much as they want. Now, there’d be, I think, vast economic consequences to that, but they could do that. But when it When it comes to selling it, if the market really values it at 40,000 and they’re pricing it at 20, they only have a finite amount. This is like any banco de banana in a Banana Republic in Latin America. When they say, Our peso was set one to one to the dollar, When the market really tests it and says, Okay, here’s your pesoo, give me a dollar, eventually, they start to run drive dollars, and then they declare a new pesoo price of 10 to 1 or whatever to fix that run on the pesos. You maintain the peg. It’s very asymmetrically. You can maintain it in one direction. If you’re willing to do whatever it takes, you definitely can’t maintain it in the other direction. If the zombie hoard is pushing against you, you will be overrun in the end.
Monetary Metals:
All right, Jeff and Keith, I want to go into a quick rapid fire section. So these questions can come from all different areas, markets, history, policy, and of course, some fun curveballs, too. I’ll ask the questions fast, but you can answer as fast or as slow as you’d like. Jeff, let’s to start with you. Could anyone realistically corner the gold or silver market today? We’ve heard of the Hunt brothers attempting to corner the market. What say you, Jeffrey Christian of CPM Group, about cornering the gold or silver markets?
Jeffrey Christian:
I don’t think you can really corner it. Having known Nelson Bunker Hunt at that time, they weren’t trying to corner it. They saw a wave coming, and they tried to ride that wave, and they made a couple of logistic mistakes. But I think that the gold and silver markets are too large and too diverse to corner it. The ownership of gold and silver is too dispersed among participants to allow for one entity to control the price.
Monetary Metals:
Keith, I send it your way. Anyone possible in this century to corner the gold or silver markets?
Keith Weiner:
Gary, I think if you tried to do that, what would happen is, as As Jeffrey said at the beginning of the interview section, you’d be buried under a delusion of metal, as all these investors just see this high price as an opportunity to take a profit. You’d run out of dollar cash before they ran out of metal.
Monetary Metals:
Okay, next rapid fire question for you. Jeff, let’s start with you. What’s the most overrated gold price narrative that’s floating around right now?
Jeffrey Christian:
That central banks were buying 30 million ounces or more per year over the last three years. Central banks reached a series of agreements, including the IMF and BIS, starting in the late ’90s and going into this century, that require them to accurately report all of their monetary reserve assets. So central banks have been reporting over the last three years, they bought 14. 6 million ounces, 8. 8 million ounces, maybe 10 million ounces over those in the last three years. The idea that those central banks would lie and break those international agreements is not credible, which suggests that anybody who tells you that central banks are secretly buying gold these days is wrong. Now, I was involved in the gold market with central banks from 1980 till now. From 1980 until, say, 2000, there were secret purchases. There were transactions that central banks would… A lot of central banks do other things with gold than just add it to monetary reserves. Sometimes people mistake that. They’ll see in China and 2022, the other people selling gold. China has a policy. It goes to your Chinese-backed currency. They’ll never have a gold-backed currency because the policy in China is the gold in China stays He’s in China.
We’re not going to let you take our gold for our currency. You can’t. You’ll never be able to do that. If you can’t find a buyer in China, you give it to the People’s Bank of China, and they hold it in a trading account until they find a Chinese buyer. There was a lot of selling from the first quarter into November of 2022 when the price was coming down for a while. It went from 2080 to 1680 over about eight months. And part of that reflected about 10 million ounces of gold being sold by Chinese entities, private entities and funds that didn’t want the gold and couldn’t find a home for it within China. By the time it got to 1680, various people, including the People’s Bank of China, said, Okay, it just lost 20% in nine months. Let’s start buying again. There are these transactions that are not monetary transactions. They’re facilitators, and they’re short-term traders of metals. Some people, I think, confuse that with purchases for monetary reserves. Insofar as that allows them to come up with a more bullish narrative, and if they’re being paid to promote gold to investors, so be it.
Monetary Metals:
Keith, same question to you. What’s the biggest price narrative around gold that you think needs to get debunked that’s overrated?
Keith Weiner:
That there’s an illicit, immoral, profit-seeking, nonprofit, government-maintained cabal. And yes, there’s a set of contradictions in there suppressing the price because they don’t want you to profit from your gold and silver. That gold would really be $50,000 an ounce. Insert whatever fantasy number you want. The reason why it’s only a mere, today, $4,000 is because of this cabal, which is not for profit and greebily taking all your money for its corporate profit is suppressing it. Over the long term, that goes back to at least the 1990s. Call it 30, 35 years of suppression. And boy, is that a tired narrative.
Monetary Metals:
All right, Jeff, I’ll end with a final question to you as our guest here. Jeff, what’s a question I should be asking all future guests of the Gold Exchange podcast?
Jeffrey Christian:
Ask them what their track record is. Yesterday, somebody pointed out that several years ago, CPM Group predicted that the gold price was going to start rising around 2019 and could get up to $3,000 or $4,000 an ounce by the period 2023, 2026. And he said, You were spot on. And I made the comment, Well, a lot of people were predicting $4,000 gold within a couple of years by 2018, 2019. And he said, Yeah, but they had always been predicting that. You were saying, We issued a sell recommendation in January 2012. We said, We think that the price could enter a cyclical decline. It could 3-5 years. It actually lasted about six years until about 2016, and then it bottomed out and moved sideways for a few years before rising. I think ask them what their track record is. That’s a good question. Good place to start.
Monetary Metals:
Jeff, it has been so fun interviewing you. It is always a pleasure when you come on. Where can people find more Jeffrey Christian and more CPM Group?
Jeffrey Christian:
Well, the best place is www.cpmgroup.com. You can read about our stuff. We have a lot of free reads, some free videos there. You can buy our Gold Silver Platinum yearbooks. You can see what other services we offer, and you can send us an email at [email protected]. There’s also hundreds of YouTube videos that we’ve posted over the last several years and interviews with other people that go back 10, 12 years and longer on YouTube and elsewhere on the internet. I don’t know if Kitco still posts some of those. Those are the best two places.
Monetary Metals:
Jeffrey, it has been an honor interviewing you as always, and we’ll have to have you back on soon. Thanks again so much.
Jeffrey Christian:
Ben, thank you.
