Jeffrey Christian, US Should Slash Defence Spending

New U.S. tariffs on Mexico and Canada, effective at 25% as of tonight, won’t directly slam gold and silver markets but signal broader economic peril, warns Jeff Christian of CPM Group at PDAC. The policy’s murky scope, whether it hits metals in concentrates, doré, or rerouted via London, pales next to its recessionary threat, reminiscent of the 1929 Smoot-Hawley Act that tanked industrial output by 67% in three years. “The bigger concern about tariffs is that you might look at a very deep recession,” Christian said, noting business equipment production has already dropped sharply amid uncertainty, even as some firms like Apple tout U.S. job creation.

Gold prices, climbing today, reflect surging investor fear, not central bank buying, pushing physical demand toward 40 million ounces this year from 17 million in 2019, Christian estimates. Tariffs will stoke inflation while curbing growth, but Russia’s potential sale of its 72 million-ounce gold hoard looms larger if Ukraine’s counteroffensive intensifies. “If Russia is more seriously damaged it could have to sell a significant portion,” he cautioned, though escalating conflict might buoy demand enough to offset it. With the Fed torn between fighting inflation or recession, and fiscal policy a wildcard, Christian sees gold holding above $2,700, driven by global anxiety unmatched since 1941.