After gold’s surge to record highs earlier this year, CPM Group’s Jeffrey Christian expected a volatile consolidation into August, then a resumption of the bull trend, which is where we are today. The market moved faster. Gold fell to around $3,900 in late July, then climbed more than $700 in a month to above $4,700. Investors were not on vacation. They were buying.
Why Higher Rates Are Not the Threat They Appear
The brief dip after Jackson Hole, along with remarks from new Fed Chair Kevin Warsh, has been interpreted as a rate-driven setback for precious metals. Christian calls that effect temporary. Nominal yields have climbed, but real rates have not. With two-year and T-bill rates around 4–5 percent and inflation near 3.7 percent, real returns remain low. Historically, he says, investors do not systematically leave gold and silver for Treasuries until real U.S. rates approach 3 percent or higher. That would require nominal yields closer to 7 percent at current inflation—still a long way off.
The statistical link is weaker than many assume. Changes in real rates and gold prices show only about a negative 16 percent correlation. Levels and the speed of rate moves matter, Christian argues, but the reason rates are rising matters more.
Rising for the Wrong Reasons
If rates were climbing because the economy was strong, inflation contained, and labor markets tight in a healthy way, that would be negative for gold. That is not the current mix. Job growth has fallen sharply and is “basically down to zero.” Official unemployment looks low in part because many people have left the workforce. Inflation has stayed above target for years. Global governments are running large deficits and adding debt at a pace the IMF has warned must become sustainable. Equities sit at record levels on a narrow, richly valued set of names.
Those conditions—sticky inflation, weaker growth, doubts about policymakers, and political strain—support investment demand for gold more than higher nominal rates subtract from it. Christian also rejects the idea that inflation is solely a monetary problem the Fed can fix alone. Fiscal policy and spending choices matter, and they have not been brought under control.
Oil near $100 a barrel adds to the inflationary pressure. Christian has argued for months that supply constraints, SPR drawdowns that take years to reverse, and slow-to-develop projects such as Venezuelan output point to elevated prices for a long time—even if the Iran conflict eases.
Targets: $5,000 Gold, $80–$90 Silver, and No Easy Exit
Christian says he would not be surprised to see gold at $4,800–$5,000 an ounce by year-end. Silver could reach $80–$90 “depending on how hot things get.” The bull trend, in his view, continues into 2027 until the political and economic picture improves—an improvement he does not think is likely.
Commodity price targets and market projections are inherently speculative, rely on specific macroeconomic assumptions, and do not guarantee future performance. Actual market movements may vary significantly from these estimates.
The midterms are part of that picture. Christian’s working assumption is that the winner matters less than the aftermath. Continued Republican control would extend current policies; a Democratic Congress would bring investigations and likely legal challenges already being prepared. A drawn-out contest would keep uncertainty high and favor precious metals as well, he believes.
Selective on Commodities, Gold Still Underowned
When it comes to commodity exposure, Christian prefers a “rifle shot” approach compared to a broad commodity bet. He remains constructive on copper’s structural deficits and electrification demand, though he would wait for a pullback from speculative highs near $6.60 a pound. Nickel looks relatively attractive in his view while grains face politically driven trade distortions. A recession would likely help gold and silver but hurt industrial and agricultural markets.
US investors still hold far less than 1 percent of financial assets in gold, he says—below even the low global average of the past half-century. Optimal-portfolio models often point to 20–30 percent, according to his analysis.
An allocation of 20% to 30% in precious metals represents a highly concentrated strategy that may subject an investor to significant sector-specific volatility and potential loss of capital. Standard diversified portfolios typically allocate a substantially lower percentage to alternative commodities. Investors should consult with a financial advisor regarding their individual risk tolerance before making concentrated allocations.
Most of gold’s rising share of assets, especially among central banks, has come from price appreciation, not massive new physical buying. At prices well above all-in sustaining costs of $1,700–$1,800 an ounce, more mine supply will eventually appear, but that takes years. Until then, Christian’s message is consistent: tangible assets remain the place capital is going while geopolitical uncertainty and fiscal strain persist.
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