(Kitco News) – As stock markets collapse and a stagflation seems near, investors should be anxious, but not fearful, said Jeff Christian, Managing Partner of CPM Group.
“If you’re not anxious, you’re not paying attention to what’s going on,” said Christian. “… But you shouldn’t be fearful about [the state of the world].”
He said that although he expects a recession “within the next four years,” investors should focus their energies on preparing “for the worst.”
Christian spoke with David Lin, Anchor and Producer at Kitco News, at the PDAC Convention in Toronto.
Real estate crash?
“Longer-term issues and longer-term structural problems… in the currency markets, financial markets, global economy, and domestic political environments” are what “keep me up at night,” said Christian.
As an example, he pointed out that investors are putting funds into residential real estate, “pushing the United States away from a nation of homeowners into a nation of renters, and that’s a real problem.
He added that he does not foresee an “imminent” collapse of the housing market, due to this financialization of the real estate sector.
“You have this massive amount of investment money coming in and buying houses, squeezing out real would-be homeowners,” he explained. “And that is much more resistant to mortgage rates and interest rates… That is very destructive of economic reality and people’s lives, but beyond that, it will actually protect us from a collapse of the housing market.”
The US Dollar
Despite his concerns about long-term issues, Christian said that he is not worried about the US Dollar’s status as a world reserve currency.
“I’ve heard about the dollar’s ‘imminent collapse’ for forty, fifty years now, and it hasn’t collapsed yet, and in fact it’s gotten very strong,” he said. “You have sixty-two percent of monetary reserves, held by central banks, in US Dollars for good reasons. So the U.S. basically owes the world so much that it owns it. And as a result, the dollar will probably stay much stronger.”
To find out Christian’s predictions for the gold price, and his inflation concerns, watch the above video.
Follow David Lin on Twitter: @davidlin_TV
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