U.S. Economy: Strength Today, Risks Tomorrow
The U.S. economy continues to show resilience, with GDP growth in the second quarter revised up to 3.3%. Much of this strength, however, reflects imports arriving in advance of new tariffs, a temporary boost that may not reflect underlying demand. Key sectors such as housing and autos show mixed performance—weakness in affordability and cyclical challenges, balanced by ongoing activity.
Leading indicators suggest vulnerabilities ahead. Rising prices, weaker labor markets, and constraints on capital availability point to the possibility of a sharper downturn in the next 6–12 months. Jeffrey Christian emphasized that recessions can emerge suddenly after periods of strong growth, especially when inflation and interest rates rise simultaneously.
Federal Reserve, Politics, and Global Uncertainty
The Federal Reserve’s independence is increasingly under pressure, with political influence raising concerns for global investors. Efforts by political leaders to exert control over central bank decisions risk destabilizing the dollar, U.S. interest rates, and Treasury borrowing capacity.
Christian highlighted that this environment contributes to broader global uncertainty, with parallels drawn to disruptive historical shifts. Immigration policies, labor shortages in key industries, and geopolitical risks add layers of unpredictability, making economic outcomes more difficult to forecast than in decades past.
The U.S. Dollar: Resilient Despite Headlines
While headlines often focus on dollar weakness, Christian pointed out that the dollar has strengthened significantly compared to prior decades. Offshore holdings of U.S. Treasuries are at record levels, reflecting investor confidence in U.S. creditworthiness. Despite long-term diversification trends, the dollar remains the dominant reserve currency and continues to attract capital as a safe-haven asset.
Importantly, strength in the dollar does not imply weakness in gold. Historically, the correlation between gold and the dollar has been only about -30%, meaning both assets often rise together in times of stress.
Stock Market Valuations and the Role of Buybacks
Equity markets remain inflated, particularly due to concentrated gains in a handful of mega-cap companies. Christian noted that corporations have already conducted more than a trillion dollars in stock buybacks this year, artificially boosting valuations. This dynamic has turned equity markets further into speculative vehicles rather than channels for capital formation, raising long-term concerns for investors.
Gold: Investor Demand Driving Prices Higher
Gold prices have been climbing since 2019, fueled by heightened geopolitical and economic anxieties. Christian expects gold to remain strong into at least 2027, supported by robust investor demand even as central banks moderate their purchases.
He emphasized that secrecy has always surrounded precious metals ownership, with many institutional investors and families holding gold quietly without publicizing it. For portfolio construction, CPM Group recommends balanced exposure to physical gold and mining equities, alongside diversified strategies tailored to client needs.
Silver: Cyclical Laggard, Long-Term Potential
Silver has trailed gold in recent years, weighed down by investor disillusionment following speculative campaigns in 2021. Many retail investors suffered losses, leading to heavy secondary selling as silver approached $30–40 per ounce.
Yet this selling pressure is easing, and historical patterns suggest silver often surges late in a gold bull market. Large surpluses in silver supply are not bearish—in fact, CPM Group data show that investor-driven surpluses often align with rising prices. Christian expects silver to follow gold higher into 2026–2027, with potential for sharp gains once investor sentiment shifts.
Broader Commodity Opportunities
Beyond gold and silver, opportunities exist in platinum, palladium, and copper. Platinum’s recent price volatility demonstrated the potential for agile investors to capture significant short-term gains. Copper remains a long-term bullish story tied to infrastructure and electrification, though near-term enthusiasm may be excessive.
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