Gold is the least worst commodity; short-term upside, longer-term sideways to lower, with weaker fundamentals than expected.

gold traded with that not with actual inflation. So it was when investors expected inflation that they bought gold, not so much when inflation actually occurred. As the inflation actually occurred, it reinforced the investor's view that yes, they should be owning gold, but gold tends to uh anticipate inflation, but you don't have to be a genius to have anticipated inflation over the last 18 months.

We're expecting inflation to stay persistently above 3%, possibly move up toward four or 5% on on an ongoing basis at least for the next several quarters. if if one of the paradoxes of 2026 is that higher inflation caused by a supply shock in oil has triggered higher yields which arguably push down gold.

That's an interesting paradox. I wonder if that relationship is going to persist.

I'm not sure if that relationship's going to persist, but I do think that the combination, you know, first off, high inflation will be positive for stimulating investment demand for gold and higher prices.

The second thing is that when we start talking about higher yields and higher interest rates, we have to put it into perspective, right? So, we're talking about somewhat higher interest rates.

We're not talking about super high interest rates, the kind that that can really kill an economy. What we are talking about are interest rates that will suck up available assets and credit and and and financial assets availability.

And that will reduce growth which will further exacerbate uh recessionary pressures and concerns about the the fragility of very high equity market indices. So those factors then do loop back into higher investment demand for gold and higher gold prices.

Well, I think that, you know, one of the things that we're looking at is really political issues around the world. Uh you have uh the Ukraine, Russian war going on. You have the US, Israeli, Iran wars going on.

Those are not going to go away anytime soon. You have a lot of domestic political disturbances in various countries around the world. And in the United States, you have an extremely unsettled political environment.

You know, Speaker of the House Mike Johnson was giving a talk to Republican leaders and leading donors to the Republican party last month, late July. And he said, and it was, you know, this was in public.

He said it. He said, "You have to understand if if the Republicans lose the House and Senate, uh, everybody in this room, virtually everybody in this room is likely to be indicted."

I mean, that's the level of admission of corruption and not unconstitutional actions that have been going on. And there's a tremendous unsettled view as to how the congressional elections are going to shake out.

I honestly don't know how they're going to shake out. I would be surprised if the Democrats uh are able to take both the House and the Senate, but just in the last few weeks, you're seeing now a lot of Republican concern about losing both the House and the Senate.

It'll be destabilizing because there's this extended period of uncertainty. How do I make economic decisions? How do I make investment decisions? If I'm a corporation, how do I make decisions as to whether or not to invest?

If I'm a consumer, do I buy a car or a house or do I buy gold and silver? You know, there's going to be this unsettled degree of risk and uncertainty and and that limits economic growth and everything winds up in the courts and you have a a a continued period of time of stagnant growth, inflationary pressures and greater risks and uncertainties.

copper and gold had at some point shared a very close correlation. That correlation somewhat broke down earlier in the summer when gold stagnated and copper started running up on its own.

I wonder if gold is really gold and silver um to an extent is just playing catchup now. And of course, it's it's I'll stress one more time that gold and silver started moving up in the same day.

So, it wasn't like one started moving up, you know, before the other. Um, so there were macro events that pushed both up. But the point I'm trying to make is, um, copper has been the hot metal this summer, all year really.

Uh, investors are flocking to copper. And, um, I'd like you to comment on the supply demand, uh, characteristics of copper right now and ultimately whether or not it's related to gold.

We updated our our 10-year projections of copper supply, demand, and price. Uh, and we finished that report like in July. Uh, and Carlos informed me this morning that he's going through it again to see about changing it.

Um, longer term, we like copper prices and and copper supply demand fundamentals. However, I think that the copper price has gotten ahead of itself. And what you saw over the last six or eight weeks really has been uh speculative buying based in part on the whole issue of AI data centers and that then kicks back to the election because you've seen increased opposition to data centers not just in the United States but on a worldwide basis and there's a big question as to the verac the wisdom of having all of these things built as well as their their costs in terms of water and capital and electricity and financial availability and assets in the equity and debt market.

And the Republicans now are starting to realize that AI data centers are a negative for them. You're seeing them roll out all sorts of advertisements. Oh, these data centers are generating a billion dollars of of of revenue for this state and and things like that.

Trying to justify and and convince people that they should not be negative on data centers. So, I think that if you saw the Democrats really gain up the upper hand in the elections that you could see a significant selloff in copper prices as speculators say, "Oh, this is bad for data centers and therefore it's bad for copper use in the electronic componentry that goes into those data centers and the power systems to power them."

It's hard to say what the fundamental value of copper is right now because the price is so much higher than the average cost of production. And what you really have to look at is the the anticipation of future production, future supply, demand balances because that's really what the price is running on.

But you know just as you know going back to your chart that you showed uh a second ago if you look at it you know what's the economic justification for that significant of an increase in copper prices over an 8week period of time.

It has to be investment speculative speculative demand. there haven't been there haven't been enough fundamental changes uh to to justify that shortterm spike higher in prices.

I'm not saying that prices go back to where they were a year ago or two years ago. Uh but I'm saying that the last eight weeks probably have been driven primarily by speculative and short-term investment plans.

By the way, can that same argument be applied to gold and silver in the last uh not eight weeks but the last three weeks was this rally driven by speculative and investment demand whereas the Yeah, absolutely.

So the fundamentals for gold and silver haven't really changed that much since maybe mid July, would you say? I'm yeah I mean we're we're looking at our 10-year projections for gold and silver this week as well and and um I'm actually concerned because of as I said you know if you look at where we were projecting for fundamentals including investment demand for gold and silver even three months ago um and you talk to people in the physical gold and silver markets worldwide They're seeing investors buy less metal than we had anticipated and sell more metal than we had anticipated.

So the gold and silver fundamentals may be weaker than everybody including CPM Group had been expecting just a few weeks ago.

the least worst commodity probably is old. I'm expecting shorter term uh more upside pressure and then longer term sideways to lower pressure. I think that you know prices around $86 a barrel uh are slightly elevated over what I might consider a market clearing price.

Uh but part of it's going to depend on what happens on a global economic basis. If we avoid a recession and we see continued economic growth greater than 1 and a.5% uh in the industrialized world, then I think that $86 is probably pretty close to a market clearing price.

If we see sub 1.5% real GDP growth in the industrialized world, then I think that you're probably talking about 70 or $75 a barrel as being a market clearing price.

I'm not going to tell anybody where they can find me. [laughter] No, no, you can find our work at cpmgroup.com. [clears throat] Um, no, it's www.cpmgroup.com is the pl is our website and you can read all, you know, we have a lot of free stuff there.

Uh but you can also read about our our yearbooks, our monthly precious metals and base metals advisory and the full range of consulting services that we have. Uh we also do twice weekly uh YouTube video videos that we post on YouTube.

We haven't done them for the last three weeks because I've been traveling in Asia, a combination work and and and vacation. Uh but unfortunately for me, I'm back in New York and sitting at my desk.

So, we'll be starting up our videos again on Friday.