Gold Dealers Can’t Afford to Hold the Metal Coming Back | Jeffrey Christian

Welcome back, I'm Jeremy Safra. Now, almost every ounce of gold ever mined is still here, melted into a single block. It's a cube, a big cube, but about seven stories high. And that's the whole above-ground stock, all of human history, worth roughly $33 trillion. Meanwhile, gross U.S. federal debt is now above $40 trillion. So all the gold ever mined doesn't cover the U.S. national debt. Now, if you own this metal, that's either the best news you'll hear today or the most worrying. And which one of that comes down to a number almost no one asks about. How much of that gold is actually for sale? Today, the man whose job is counting it, stay with us. All right, my guest has been counting this metal since 1970s. Jeffrey Christian, of course, ran the commodities research group inside Goldman Sachs. And in 1986, he took that team out of the bank and he built CPM Group around it. Now, he's advised the World Bank, the IMF, the United Nations, and his firm's job is knowing exactly how much metal there is and where it sits and who actually will part with it. Jeff, welcome back to Kitco News. Great to see you. It's good to see you, Jimmy. It's good to be back with Kitco. Yeah. All right. Now, Jeff, one bit of housekeeping first, 30 seconds, then we go somewhere much bigger. We can show this on screen, too, because you issue these buy reports on Mondays on Kitco and CPM published a buy on October gold at $4,683.50 with a stop at $46.30. A stop, by the way, for the audience is just a preset exit where you decide in advance you'll get out if you're wrong. Now, that contract traded through the stop. So did you get out and where? Yeah, that would have been stopped out today. Yeah. And it would have been stopped out at the next trade after the price fell below $46.30, whatever that price was. We'll be issuing a new gold trade recommendation today. Yeah. Okay. Today. And what did the market kind of show you that the original setup missed? Well, I think that it's right now, and we're talking on Thursday, the 27th of August, we're going into the Kansas City Fed's Jackson Hole Conference. That's going to be very critical. There are a whole lot of economic and political issues swirling around right now and how the Fed is going to deal with things. The treasury has been doing some things that are extremely questionable and probably negative, complicating the Fed's efforts to balance its anti-inflation and pro-employment charter. So there's a big question as to what the Fed's going to say at Jackson Hole. And last year, it came out and it had it wrong. It said, hey, the economy is weaker than we thought. So we may be lowering interest rates more often in the last four months of 2025 and into 2026. And gold, silver, platinum, palladium, copper, stock market, bond market, everything took off for like four or five months. And then in mid-March, the Fed came back and said we were wrong in August. So there's a tremendous amount of focus on what the Fed's going to say at Jackson Hole today, tomorrow, and Saturday. You also have the Bank of Japan and a number of other central banks that will be giving presentations. And there's just tremendous confusion because you look at inflation, it is persistent. It's moving a little bit higher. The PCE came out yesterday. That suggests that the Fed will not be inclined to lower interest rates. But if you look at other GDP figures and economic figures, and you look at what the treasury seems to be signaling it's seeing in the economy, that's also just lower interest rates. So the Fed's really in a tight bind. So there's a lot of attention on what the Fed's going to say this week. And that's, I think, what we missed on they say the price could be $4,850 by Monday, or it could be $4,200. We can go sharply either way. What we saw today is a lot of people sort of thinking that the Fed's not going to signal anything about lower interest rates. If anything, it's going to be signaling about higher interest rates because of the risks and uncertainties in the market. Well said. And of course, I got lots of coffee here, Jeff. And we've been focused on Jackson Hole. We've got a great guest coming up exclusively tomorrow. I'm not going to say who it is quite yet, but we'll be covering that exclusively too. We're going to build out silver. I want to talk to you about PGMs before we're done. But I kind of want to start with that biggest number on the board. I mean, in my intro, we talked about it, 220,700 tons, about 7.1 billion ounces, call it nearly $33 trillion. That's that cube in the open. Now, two more numbers here. The world's mines had their best year on record in 2025, I guess, roughly 118 million ounces of new gold, about $544 billion worth. The federal government spent around $970 billion on net interest last year. So all the new gold on the planet covers about half of one country's interest bill. And to be exact, and I have to, you'll appreciate this because somebody will check, of the $40 trillion in gross federal debt, about $32.3 trillion is owed to outside investors. The rest, the government owes its own trust funds, which means all the gold above ground and everything Washington owes its actual lenders are almost the same number. So I mean, everyone says gold protects you from what's happening to the currency. If that's right, there isn't close to enough of it. So the question only you can answer here is, I mean, of those 220,000, roughly tons, how much is actually available? I mean, not how much exists, but how much would somebody genuinely sell at a price? Yeah, the relationship, first off, you know, the relationship between U.S. federal deficits and debt and gold is not really germane to the key. What's important is what you were leaning toward, which is that the gold market is very small compared to the financial market. And if you want to talk about $40 trillion in U.S. federal debt, that's nothing. Look at the 300 plus trillion dollars in total debt on a global basis, most of which is held by other central banks, other governments, private corporations and individuals, all of whom or almost all of whom have much worse credit ratings than the U.S. Treasury. Now, going to your question, yeah, there's 7 billion ounces of gold that's been mined, rough estimate, through history. About 700 million of that is presumed lost, meaning about 90 percent of it is still around. But if you break that down, what's really important is what's available in bullion form, because most of that 6.3 billion ounces of gold is in jewelry and decorative objects and things that probably won't be melted down too much. So it really comes down to what's in bullion form, bullion bars, bullion coins. Central banks own about 1.2 billion ounces. They have been net buyers over the last 10, well, since 2008, so almost 18 years now. Private investors own about 2.3 billion ounces. Of that, there is some that investors will sell, and investors do sell on an ongoing basis. We look at net investment demand because as a group, investors tend to be net buyers. We have data going back to about 1965, 66, and investors have been net buyers in all but like three or four years. But the reality is that that net is a composite of gross purchases and gross sales. There are always investors buying gold, but there are always some investors selling gold. And so it's there. It's very hard to say how much of that investment demand, how much of those investment holdings could come into the market. And it goes back to something that Abe Lincoln said, every man has his price. So I've known people who have said, I'll never sell my gold, and then it doubles in five months and say, okay, I'll sell my gold. And I'll look to buy it back if the price falls sharply in another five months. And that does happen. And so you see investors buying and selling. It's probably a few hundred million ounces that is readily available. If you look at London, LBMA reported inventories of bullion, and that includes not only bars, but also coins and such. That's almost back to its record levels that we saw in 2020, 2021. There's been a lot of gold that's gone back into London, gold that's been sold by investors around the world and gold that was shipped from London to New York when the arbitrage made that profitable. And now that the arbitrage has reversed, you've seen a lot of gold going back to London from New York and from other markets. So there are hundreds of millions of ounces of gold that are readily available at the right price. And it all comes down to what price and what price expectations are of those bullion holders. Yeah. Yeah. I was going to say, because if we look at it, then who owns the marginal few hundred million ounces that are actually set the price? Is it ETFs, private vaults, dealers, central banks? And which of those holders becomes a seller when demand suddenly doubles? It's interesting because we've seen a diversification of who is active in the gold market. And 25 years ago, we were talking about the gold renaissance and the upward shift in the investment demand curve, saying that more investors in more parts of the world and more types of investors would buy more gold for a longer period of time than ever before. And that's been true for the last 25 years. But just in the last year or so, going back again to Jackson Hole in August of 2025, we've seen a big influx of non-traditional gold investors. And so you still have the traditional gold investors who are buying bullion or buying gold in various forms, and they tend to be buy and hold. But starting at the end of August last year, we saw this massive surge of investors, retail investors, high net worth individuals, and institutional investors around the world who jumped into gold and bought a lot of gold in the 2025 and the first month of this year, and then they sold it. And these were more opportunistic investors who were looking at the state of the world, looking at what the Fed was saying at Jackson Hole, looking at what was going on in the US economy, what was going on in the global economy that was quite distinct from what was going on in the US economy. And there were a lot of non-traditional gold investors who jumped in. A lot of it came in through ETFs because that's the easiest way for these people to buy and sell gold. And you had this massive surge of new investors joining the traditional investors as buyers. And then you had this great migration out starting at the end of January, and you saw a tremendous amount of gold sold in ETFs, but also in bullion form and coin form and what we call medallions, which are their rounds and other small investor products that are not issued by official national mints. I think this is a question I really wanted you for. I mean, when you put the size of the sovereign debt next to the size of the metal, does that make you more bullish on gold, or does it just tell you simply gold can't do the job people are asking of it? Well, I don't know that anybody, any rational investor or government official thinks that gold can do what it did on an international monetary basis back in the 20s and 30s. Gold was a third of financial wealth in 1930, by our estimate. And since 1980, it's been less than 1%, sometimes as little as 0.2% of financial wealth. So gold isn't the monetary asset that it used to be. It hasn't been really since we went off the gold standard. It's very important as an investment and as a financial asset. And that's where it really comes in. So we look at the global economic environment, we look at the global financial environment, massive amounts of debt. As I said, the US government's deficits, spending and debt are obscene, and they're very treacherous and they're very dangerous because the US economy and the US treasury are so central and important to global economics and finance. But it's also everybody else. You have this massive growth in sovereign debt, not just with the US, but with other governments, as well as corporate and private debt. And the world's been living on tomorrow's revenue for 50 years, 60 years now. And it's clearly unsustainable. Now, over those last 50, 60 years, there have been people who have continually waved their arms in the air and said, hey, we can't afford... I remember 1979, Jimmy Carter as president, we had less than a trillion dollars of US federal debt. We had a 54, $58 billion deficit. And the Reagan administration ran on the platform, this is an unsustainable amount of deficit spending and debt. And there were a lot of people who were waving their arms in the air saying, yeah, gold's going to $10,000 imminently because we can't live with a trillion dollars of federal debt. Well, that was $39 trillion and 50 some odd years ago, or 40 some odd years ago. And we've lived with it. That said, you can say, look, this dream can go on for a long, long time, but the reality is there are limits to it. And you have massively overextended financial markets, debt markets, equity markets, and all of that goes together and says, okay, what are you going to do to diversify your wealth, diversify your investment portfolio, protect yourself from currency problems, inflation problems, debt problems, economic downturns, all of those economic and political risks? And the answer is, I'm going to buy some gold and silver. I'm not looking to see the world returned to a gold standard where we have 30% of the world wealth in physical gold. I'm looking at a world where we might see 1% or 1.2% of the world's financial wealth in physical gold. And that's enough to drive the gold price sharply higher. Interesting. Does gold need to circulate to be money or can it remain monetary precisely because it sits outside the credit system as reserve collateral? That's exactly right. I mean, if you look at the definition of money and the purposes of money, and gold used to provide all of those purposes that money provides, gold's no longer a financial, a monetary currency. It is a monetary reserve asset. Central banks look at gold and they say, it's not something that we're going to circulate. It's not something that we're going to use for balance of payment, trade and capital flow deficits and surpluses. But it is something that we will use as a monetary reserve asset in a limited level, understanding that gold's too small to be a significant part of the thing. And you've heard all these people, I'm sure you interview them all the time, talking about how gold as a percentage of central bank monetary reserves is now larger than the US treasuries. And that's true. But if you look at it, the vast majority of that increase in gold as a percentage of monetary reserves has been due to the price appreciation, not to the fact that, I mean, central banks have added, they've added about 180 million ounces of gold to their monetary reserves over the last 20 years. And that has increased the value and the percentage of monetary reserves that are in gold. But the big increase in monetary reserve, the gold's percentage of monetary reserves has been due to the price appreciation. And that's going to continue to be the situation, both on a monetary reserve basis and on a financial basis. And we talk about the financial markets are the private markets. And we throw in, by the way, sovereign wealth funds, because those are investment funds. They're not monetary authorities. Monetary authorities buy gold as a gold reserve. They don't have a target time or maturity of that position. I'm buying gold and I'm holding it. Sovereign wealth funds are investment funds. I'm buying gold with the expectation of selling it within one to five years. And you said something there, Jeff, and I want to go back to it for a second, because you're talking about if global positions hold only a one to one point two percent in physical gold. Run the sensitivity for us. I mean, what happens if that allocation rises by just one percentage point? Can the available bullion that we talked about, that float, absorb it without a step up change in price? No, the absorption would primarily be through the price. I think we ran some calculations a few years ago during the early days of the gold renaissance, the period of, say, 2000 to 2011 or 12. We ran some numbers like what percentage of the increased value of gold was due to price appreciation versus the addition of gold in private as investment holdings, as well as monetary reserves. And I believe that more than two thirds of the appreciation was due to the price rise. So you would expect to see that. You would expect to see investors, and we do expect to see investors, continuing to buy historically large amounts of gold, not just for the next two years, but we take our projections out 10 years. For the foreseeable future, we see investors and central banks adding to their gold reserves. But the big increase in the value of that gold as a percentage of financial wealth will be through price appreciation. Interesting. Now, obviously, price doesn't create gold. It persuades an existing owner to surrender it. So if the central banks remain buyers rather than sellers here, does the clearing price rise smoothly, or does it gap higher because an class of holders refuses to provide liquidity? Well, if you look at the last 26 years, since 2000, what you saw was that the gold price started this century depressed, and then we started seeing this series of economic and political challenges and problems and increased uncertainties and higher risks, and investors started buying it. And gold prices rose from 2002 to 2011. And then they fell on a cyclical basis from September of 2011 into 2016 or so. They moved sideways for about three or four years. They started rising again in 2019, and they've risen from 2019 until this year. And so you do see cyclical ebbs and flows within a secular bull market, and you should expect to see that. Again, looking at the ebb and flow of economic and political risk, investors will buy and will sell. And one of the things that a lot of people were surprised by in the first eight months of this year is the fact that a lot of those investors who have bought since 2019, a significant number of them actually were willing to sell once the price got to $5,500. And they took the gold price down $1,000 in about three trading days, and they continued to sell gold over the ensuing five months, six months. So the reality is that, yes, investors will look at the state of the world, the state of their personal situation, and there will be times when they're buying less gold, as well as times when they're buying more gold. Now, I want to talk about your own data here, because you're just back from a trip to Asia, and you've seen a lot over there. I'll let you talk about it. But you've told people that dealers and refiners around the world are net buyers of gold from investors right now. I mean, metal coming back over the counter. So what are you hearing on premiums and on the ratio of metal coming in versus going out? Yeah, it's pretty much global. I mean, we've been talking, we always talk to people around the world, and we continue to do that. We're talking to dealers and refiners, and we're also looking at pricing in various geographic markets. And what you're seeing is right now, really in August, there has been a surge of profit-taking from investors who had bought gold earlier. And as I said, you had the gold price rise very sharply from last August through January. Then it came down, and it was moving sideways in June and July. And a lot of investors were very pessimistic. There were people talking about $3,800, $3,500, $3,000. That didn't happen. And we saw the gold price rise over the course of August. And as the gold price rose, we saw investors around the world saying, okay, it's not $4,000, it's $4,400, $4,500, $4,600, I'm going to sell. So we've been seeing that, and it has backed up in the dealer market and in the refineries. And as a result, a lot of geographic markets now have discounts. So if you're selling a US Eagle or a maple leaf, one ounce maple leaf, I believe is still, if you're selling it back to a dealer, you can get a premium for it. But if you're selling smaller things or non-official coins, if official coins have a premium, and they do, and you sell them to a dealer, the dealer will keep those because he can get a premium when he resells them. But if it's not an official coin, if it's a medallion or a one ounce bar or a kilo bar, or one of these other smaller things, the dealers cannot afford to hold those inventories. They don't have the credit lines to hold those inventories. So they have to sell them to wholesalers who sell them to refiners. The refiners then have to melt those down into good delivery bars because they don't have the credit lines to hold all of that metal. Their banks will say, you can hold inventories, but it has to be in good delivery bars. So you're seeing this backed up and everybody gets a discount for bullion, for indiscriminate bullion bars, and for things that are not 100 or 400 ounce bars or official coins. And you're seeing those discounts around the world right now. So is this really a gold selling story or a dealer kind of balance sheet story? I mean, the dealer can't finance inventory, so the metal gets pushed immediately into the refining pipeline. Could that create a paradox of retail shortages and high premiums later, even while refiners are currently buried in metal? Absolutely. It's a great buying opportunity if you're a long-term investor. And you've got the situation with coin dealers, retail and wholesale coin dealers, and with many refiners where they say, look, they go to their banks or whoever's providing them financing and say, look, my business is increasing, the volumes are increasing, the value of my products, gold and silver, platinum and palladium are up sharply. I need an increased credit line. And the banks say, no, you don't understand. Your product has risen sharply in price. The risks of downside have increased equally sharply. You've got an increased volatility in the price of your products, and you've got a very increased risk and uncertainties there. This is exactly when we don't increase your credit line because you have become a greater credit risk. So that's a real big problem. That exerts downside price pressure, which then gives longer-term investors who have the finance the opportunity to buy at lower prices. Interesting. And I've got to ask you about the fund side. It seems to be doing the opposite. I mean, I'm looking here, gold and Bitcoin funds took in a record of $7 billion over five trading sessions recently. GDL, GLD rather, a loan, the largest gold fund on the market, physically backed by bullion, held through its custodians, pulled in $3.4 billion in a single week. And GLD is still down $2.8 billion for the year on $155 billion in assets. So on one side, some coin and bar holders are selling, and on the other, ETF vault holdings are growing. Which side is early? I think that the ETF people are on time, and the coin sellers are late. I got to ask you, just bringing it back to the central banks now, because they bought 289 tons in the second quarter, up 62% from a year earlier, strongest second quarter in the World Gold Council's records. But look at the whole half. First buying half came to 345 tons. That's the weakest first half since 2022. And here's the part nobody really noticed. I mean, the council revised its first quarter figure down to 57 tons. So that's 187 tons lower than the market had been told. I'm bringing this up because back in June, you said central banks kind of looked like they were turning price sensitive, waiting for a pullback before they bought more. The data has since been revised towards you. So what are they actually doing? Well, central banks, when we talk about central banks, we have to do several things. First off, we can talk about central banks as a group, and then we segregate Russia out, because Russia's a big outlier. Central banks in general, ex-Russia, they've always been more price sensitive than private investors, and they kind of moved away from that, but they have kind of moved back to that. So you've seen a lot less central bank purchasing earlier in the year, and you've seen some selling. Now, Russia's a particularly special one. And what we've seen since they invaded Ukraine in February of 2022 is that Russia's central bank has been using its gold reserves to finance the government and the war effort. So it's been flopping back and forth month to month. When they have extra cash, they will buy gold from refineries within Russia. And when they need cash the next month, they will sell gold to groups that are willing to risk sanction busting to buy it. That has been the case up until about 13 months ago. 13 months ago, Russia's financial situation deteriorated sharply. And for 10 of the last 12 months into May, you saw the Russian central bank selling a lot of gold. They needed the money, and their total gold reserves fell sharply below anything that they had been since 2022 at least. Now, in June, where the Russian central bank bought like 2.3 million ounces, they bought it back and they restored that. And then part of that had to do with the relaxation of sanctions, which allowed them to sell more oil and gas, which brought in more foreign exchange reserves, which were mostly dollars and euros, which they immediately sold and bought gold. If you take out Russia's central bank purchases in June, you have a much more anemic central bank situation. You also have to be careful because as I said earlier, we look at monetary reserves, central banks and monetary authorities. We do not add in sovereign wealth funds. I know there are some companies that will look at sovereign wealth funds and when sovereign wealth funds are buying, they add it into their government purchases. But when sovereign wealth funds are selling as they were in 2022, they don't. They don't count that selling. You know as well, Jeff, where this all goes. You were talking about Russia there, and I'm just curious. If Russia sold gold to finance spending and then bought back in June, did the metal ever leave the country or was this kind of largely a transfer between two state entities, I guess? No, I think that a lot of, obviously, no one's admitting that they're buying gold from the Russian government. But a lot of the gold that the Russian central bank has sold over the last 10 of the last 13 months, a lot of that gold has gone out of the country and it's going off to private entities that are willing to buy it from them and maybe a couple other governments. That's a good insight. It's a good insight because I mean, how much of what we can call central bank buying is genuine demand from the global markets and how much is kind of internal balance sheet managers that never changes the available supply? Well, I'm not sure what you mean by internal. I mean, central banks as a group will trade among each other. Usually they don't. Back in the days when I was involved in the 70s and 80s and 90s, even into the aughties, when central banks were much more secretive, not just about gold, but about all kinds of things. Central bank transparency really started to pick up in the 90s with various international agreements and things like that, not just with gold, but with other things. But back when central banks were more secretive about their transactions and their monetary reserve activities, you would oftentimes see a central bank selling to another central bank so that they could say, well, we sold some gold, but we sold it to another central bank. So it didn't hit the market. Knowing full well that that central bank would then sell it. And that central bank didn't have to report it as a change in their reserves because it wasn't a change in their reserves. They didn't touch their reserves. This was metal that was coming in and going out. So you had things like that that happened back when the secrecy was greater. That's pretty much dissipated in the last three decades, but it's there. But the central banks will primarily trade with bullion dealers and banks. I know you saw the news, but the treasury, also named gold, is one of the five Iranian sectors that's targeting with sanctions alongside shipping, aviation, rather. I guess we got technology, digital assets. Does that do anything? What does that kind of do to the physical flows? And where does that metal end up instead? What it does is it changes the flow of metal within the market, and it causes Iranian individuals and companies and the Iranian government to pay a premium for their metal because they're in essence doing things that are risky. Their counterparts are risking penalties for breaking those sanctions. So it doesn't necessarily change dramatically the balance of metal flowing through the market, but it changes the direction and the trading patterns and the prices received for doing business with Iran. Quickly on China, too, because our board carries the Shanghai benchmark. The latest afternoon fix was 993.37 won per gram converted. At today's exchange rate, that's roughly 45.97 an ounce below London spot. So I guess flat to a slight discount. What does that tell you, though, about the Chinese physical buyer? What's happening in China primarily right now is you're seeing strong investor demand. You're seeing relatively weak jewelry demand. The central bank has resumed buying in small amounts, and institutional investors are doing much more trading. So we've seen an increase in Chinese ETF purchases. The Chinese government for the last five years or so has been working to build in protections for retail investors with the increased price and the increased volatility and the increased trading volumes. In China, as in the rest of the world, you've seen an increase in fraudulent or unregulated or scammy types of gold trading operations. And a lot of those were targeting gold exchange programs and gold account programs to retail investors. And the Chinese government, which is very concerned about people losing money through scams and frauds, has tightened the noose over the last five years and brought down, and it reached a culmination in July of this year, where it shut down a lot of unregulated gold transactions for retail investors. But the institutional investors have been very active in the institutional market, and the retail investors have been buying increased amounts of physical gold, but they're doing it through regulated entities. Entities, yeah. So, I mean, is Beijing quietly building gold into a control destination for household savings as money moves out of property, not merely protecting retail investors? I mean, how far can kind of China encourage its citizens and institutions to own more gold before that starts looking like an official vote against the renminbi itself? The Chinese government has, for years, issued public statements saying, we think that Chinese investors should have some of their wealth in gold and silver. And it goes back centuries, the Chinese investors, because China, prior to the communist takeover in 1949, China went through several centuries of political disunion and revolutions and civil wars and things like that. You didn't really have effective currencies, Chinese currencies. The major currencies that were trading in China prior to 1949 were US, Spanish, and Mexican silver coins. And there was this tremendous amount, I mean, hundreds of millions of ounces, apparently, if not billions of ounces of silver coins that were used as medium of exchange within China. And the same was true for gold. So, the AU have this long history of Chinese investors saying, I want to have part of my wealth in gold and silver. And you also have this history of the Chinese Communist Party and Chinese Communist government saying, we understand that people have that, we understand why they have it. And while we wish that they were really good, loyal communist citizens, this is the economic reality that we'll deal with. So, this is where it is. And we want to make sure that people don't lose their shirts to disreputable, unregulated purveyors of gold and silver products. Interesting. You were talking a little bit about China trying to get Beijing at least trying to eliminate those scams. We can think about counterfeit bars, unallocated kind of paper gold, those leveraged trading platforms. Is the goal to push retail demand onto the Shanghai Gold Exchange, where, of course, ownership, custody, and delivery can be kind of monitored? And does that make Chinese demand data more trustworthy than it was, say, five years ago? I think it's funny because the reality is that Chinese gold market data has been more reliable than the data from a lot of other countries, including the United States, partly because you have a communist government that manages the economy and they do a lot of work. So, we were talking with the Chinese government prior to 2020 or so about putting together various programs to try to take and create a black box system for gathering gold refining data globally along the lines of what they do in China, using a black box type of system whereby you could have better indications how much gold has been refined from mine output, how much is being refined from new scrap industrial product waste, and how much is coming in from old scrap or end of life, old jewelry, old electronics, and stuff like that. People don't realize how much gold new scrap is generated. We've worked with the Canadian government. We've worked with other governments over the years trying to help them understand. If I'm using gold to make a product and I'm casting that product, I have a scrappage rate of about 50%. If I'm using sputtering targets, my scrappage rate is about 85%. And if you put it in average, it's about 67%, which means that if I'm a fabricator and I take a 100-ounce bar off of the Shanghai Gold Exchange and I'm making my product out of that, let's say that I'm using sputtering targets, I will use 15 ounces of that that will show up in my end product, and I'll have 85 ounces that is production scrap, which gets re-refined, cast into a new 100-ounce bar, and sold to somebody via the Shanghai Gold Exchange. So you have this do loop there, and there are people who don't understand that, and they'll say, we think that Chinese fabrication demand is four times what CPM Group or the China Gold Association suggest it is, because you look at the deliveries from the SGE. But you have to adjust the deliveries from the SGE to understand that this is stuff that's going to fabricators, and that 67%, 68% of it on average comes back as newly refined metal recovered from new scrap. So there's these nuances that are there that are very important to understand that a lot of people, I guess, outside of China don't understand. Did the Chinese officials actually open that black box for you? They have the black box in place. So the data, to go back to your comment, the data for Chinese refining is pretty accurate. What we wanted to do was try to build that black box on a global basis. And it was very interesting because we went to various gold entities, including mining companies outside of China, the Chinese government and CPM Group did this, and there was no interest in financing such a program to get better data. Okay, let's move to silver because unlike gold, much of it gets consumed with refineries already kind of backed up. Is the widely cited silver deficit actually visible in the physical market that you're looking at? I mean, right now we look at the spot, I mean, gold's up about a third of percent on the spot. Silver's surging nearly 2% today. So I mean, same argument as gold with one enormous difference here. We don't see a silver deficit. We measure surpluses and deficits as total supply, less fabrication demand. And if you do that, you have surpluses in the silver market, relatively smaller surpluses and relatively tight. And those surpluses then are picked up by investors. So what we're seeing in the silver market is we're not seeing tightness due to a deficit of newly refined silver entering the market. What we are seeing is investors flipping and flopping back and forth as large net buyers, then large net sellers, and then large net buyers again. And that's really been the major factor. And then right now, as with gold, you're seeing big discounts because there are people who were very spooked when silver got down to $55, $58 an ounce in June and July. And when the price got up to $68 today, they're saying, okay, let me just get out. And there are, I mean, we're picking up comments from investors who are really upset because they have 100-ounce bars or coins or medallions, and they're taking them to sell. And there are pretty large discounts right now being stated by dealers. If you want to sell me one-ounce medallions that are not good government-issued coins, or you want to sell me a 10-ounce bar, I'm going to have to take that stuff and have it refined into a 1,000-ounce good delivery bar so that it's saleable in the wholesale market. I have to charge you a discount. So, I mean, if large investors are kind of both the biggest buyers and the sellers, is silver's price really being set by industrial scarcity or by whichever investor flow dominates that month? Investment demand flows have always been more important in determining the silver price than have been industrial demand for silver. And one more on silver here, about the market itself changing. CME plans to take its 100-ounce silver contract to round the clock trading seven days a week, pending regulatory approval. That contract was, of course, built for retail, and it's cash settled, so nobody ever takes delivery of anything. I mean, their metals business ran over a million contracts a day in the first half of this year, precious metal volume up more than 50%. I mean, across all of its markets, CME counts more than 600,000 retail investors. So, retail will be able to trade silver at 3 in the morning on a Sunday with leverage in a contract where no metal ever moves. What does that do to the market this size? It helps liquidity, and it helps support the silver price. I want to say two things about gold and silver markets in general right now. One of them is good, and one of them is bad. We are seeing a tremendous amount of innovation and new ways to buy and sell gold and silver globally. And as you mentioned, I was in India for most of August, and there was tremendous innovation in the Indian silver market and gold market, even with the imposition of restrictions that the government has put on place because of financial constrictions and tightness of foreign exchange and things like that. India is the largest holder of gold and silver probably in the world on a private basis, and it's one of the two largest markets with China. And we're seeing a tremendous amount of innovation there. We're seeing innovations within China too, but within the context of China being a managed economy as opposed to the more freewheeling Indian economy. And we're seeing renovations and innovations all over the world. And the good thing is that gold and silver are becoming much more normalized, if you will, and more investors are buying it and holding it and saying, I think I want to have part of my wealth in gold and silver. That's the gold renaissance that we predicted 26 years ago. And we've seen it emerging and it's accelerating over the last year and a half, two years globally. That's the good news. The bad news is just like when an army is on the march, there are profiteers that follow it. There has been an increase in fraudulent things, scams, underreported things, unregulated things, people and corporations that we would not trade with. And I've been in this business since 1970s. The volume of frauds and scams and disreputable things, they might not be frauds and scams, but they're not the kinds of things that we feel secure telling our clients they can invest in. I've never seen such a high volume of such things right now. So you're really setting yourself up, or the market is setting itself up for some scandals when some of these things collapse, and you find out that this guy doesn't have the assets under management that he says he does and things like that. Now, I got to ask you about Platinum and Palladium because our time is always going too fast, where it's 52 minutes already, Jeff. It's been kind of an interesting one on the Plat side this year. Platinum now carries a roughly $500 premium over Palladium. Is that spread finally wide and persistent enough to make automakers resign catalysts back towards Palladium? What are your thoughts here on the Plat's market? Yeah, the technology in autocats has changed over the last 10, 15, 20 years. And the auto industry now, it used to be that the ratio was two to one, now it's one to one. So the fact that Platinum is $500 more than Palladium right now gives a good financial incentive to use more Palladium at the expense of Platinum. And the technology exists to allow that. There were some issues 10 years ago or so with the way the auto industry designed its vehicles, the engines, the carburation, the undercarriage, and all of that stuff had to be revised to allow greater flexibility between shifting back and forth between Platinum and Palladium intense catalysts. That's there now. So the auto industry has the capacity to shift back toward more Palladium if it wants to. It won't do it if the price differential is a certain level for a month or two. It takes a longer... Well, it can do that on a short term basis if it needs to. But for a wholesale longer term shift away from Platinum back toward Palladium, you need to see a much more persistent Platinum premium relative to Palladium. You've spent decades, I don't mean to age you, Jeff, but you've spent decades separating physical reality from market stories. I mean, we try to cover it all accurately here at Kitco. What is the single number on your desk that will tell you whether this precious metals move has another major leg ahead? Our model is investment demand is a major factor determining price. And then you say, so what determines investment demand? And it's a little bit different between gold and silver. Gold is much more of a financial asset. Silver does have that industrial add in that complicates things. More people in more parts of the world see gold as that financial alternative safe haven investment than they see silver. But generally speaking, it's the same thing. So then you say, well, what's going to determine investment demand for gold and silver? And you realize very rapidly, it's less the fabrication, the balance between supply and fabrication demand, it's less the cost of production. All of those factors are important and they do influence the long-term price of silver and gold. But what's really important is that investment demand, which is determined by what are investors thinking is their greatest risks or securities right now. Gold was $250 an ounce in 1999 because investors around the world bought into this nonsensical idea of a new economic paradigm where the stock market would rise fourfold and we'd not have recessions and inflation was dead forever. Within a few years, that was gone and gold was $700 and then it was $1,700 an ounce. And now it's $4,600 an ounce because investors have said, okay, if there is a new economic paradigm, it's not a good one. And we have all of these things. We have this wildly overvalued stock market. We have this massive amount of debt, private as well as sovereign debt. We have AI and crypto sucking up tremendous amounts of equity as well as monetary debt, squeezing out, for want of a better word, legitimate companies. If you look at AI and you look at the investments into it these days, it's very similar to what we saw with the internet stock bubble in the period 1998 to 2000, 2001. Investors lost $7 trillion when that bubble popped. They lost $17 trillion when the collateralized mortgage obligation bubble popped 2006 to 2009. And they're probably going to lose a whole lot when the crypto and the AI bubbles pop and they will pop. Well, then the real question is, I guess, isn't whether the world runs out of metal. It's about confidence. All right. Jeffrey Christian of CPM Group joining us again. Always a pleasure. Thanks for making the time after this Asia trip. I know you're probably still jet-lagged and I appreciate it. Thanks, Jeff. Thank you for taking the time to have a really substantive conversation about these fundamentals. Absolutely. Yeah, yeah. It's changed. I feel like I've been doing this too long now, Jeff. All right. Appreciate your time. We'll see you soon. Take care. Thank you. The takeaway is not that the world is about to run out of metal. It's that only a small share of the metal already above ground is genuinely available at today's price. Now, for gold and silver, fabrication matters. Mine supply matters. But investment demand ultimately sets the price, it sounds like. And that demand turns on confidence in everything else investors own. So the number to watch is not simply how many tons exist. It's how much capital decides it no longer wants to stay in financial assets. I'm Jeremy Safran. For all of us here at KIKO News, thanks for watching.