Jeffrey Christian: The Tariff Trap - Navigating the Road to Recession and Inflation

Tom Bodrovics, welcomes back Jeff Christian, Managing Partner of CPM Group, for a thought-provoking episode. The conversation begins around the far-reaching implications of tariffs on markets, industries, and economies. Tariffs are not one-size-fits-all, with their impact hinging on both the specific country and metal involved. Jeff expresses his disdain for tariffs, citing their detrimental effects on economic activity and inflation. The Smoot-Hawley Tariff Act of 1930 serves as a cautionary tale, illustrating the devastating consequences on imports, exports, and both the US economy and the global marketplace during the Great Depression. The threat of retaliation could trigger a US recession, while gold and silver might experience heightened demand due to market uncertainty. Tariffs involve importers bearing added costs, instigating inflation, complicating international trade, and affecting base metals.

Two potential solutions for government funding - Value Added Tax (VAT) and gold-backed bonds - are examined, yet concerns over regressiveness, economic downturns, and practicality linger. Central banks have turned to gold as a means of securing dollar reserves amid past economic instability under the gold standard. Recent geopolitical developments have prompted some Eastern European countries to stockpile gold for safety against external pressures like Russia. The surge in demand for physical gold within the US is accompanied by a transition from London to New York, giving rise to borrowing and EFP premiums as markets grapple with economic and political uncertainties.

Jeff discusses the problems inherent in all financial system and why those problems would also exist under a gold standard. He argues that the Fed has played an important role in reducing the severity of economic contractions. However, he cautions that the only financial system in history that has not failed is this the current one.

Time Stamp References:
0:00 - Introduction
0:50 - Tariff Discussion
12:10 - Impacts on Metals?
14:38 - Various Scenarios
19:58 - Inflationary/Recessionary
26:03 - Fast Track U.S. Industry?
28:13 - Effects on Currencies?
31:13 - Recession Outlook?
36:00 - ApPalling Statistics
38:00 - Income Tax & Trump
42:07 - A Gold Backed Bond?
45:49 - Fed & Depressions
52:13 - C.B. Gold Reserves
56:39 - CPM Client Concerns?
59:55 - EFP Premiums & Supply
1:07:48 - Reality & Forecast
1:10:00 - Wrap Up

Talking Points From This Episode
- Tariffs' detrimental effects on economic activity and inflation are discussed, with Smoot-Hawley Act as a historical reference.
- Central banks turn to gold as a hedge against economic instability; some countries stockpile for geopolitical safety.
- US recession potential and increased demand for gold and silver due to tariff uncertainty.

Guest Links
Twitter: https://twitter.com/CPMGroupLLC
Website: https://www.cpmgroup.com/
Questions Email: info@cpmgroup.com
YouTube Link: https://www.youtube.com/c/CPMGroup/videos

Jeffrey Christian is the Managing Partner of the CPM Group. He is considered one of the most knowledgeable experts on precious metals markets, commodities in general, and financial engineering, using options for hedging and investing purposes. He is the author of Commodities Rising 2006.

Jeffrey Christian has been a prominent analyst and advisor on precious metals and commodities markets since the 1970s, with work spanning precious metals, energy markets, base metals, agricultural markets, and economic analysis. The company was founded in 1986, spinning off the Commodities Research Group from Goldman, Sachs & Co and its commodities trading arm, J. Aron & Company.

He has advised many of the world's largest corporations and institutional investors on managing their commodities price and market exposures and providing advisory services to the World Bank, United Nations, International Monetary Fund, and numerous governments.