Mike Norman, anchor, HardAssetsInvestor.com (Norman): Hello, everybody. Welcome back to HardAssetsInvestor.com. I’m Mike Norman, your host. And here with me for the second part of my interview is Jeffrey Christian, who is managing director of CPM Group.

Jeffrey, we spoke about gold in the last discussion. Let’s talk a little bit about the broader market for commodities. Commodity prices are actually coming down now, as a reflection, I think, of maybe another slowdown in global economic growth. It’s interesting because with gold … you had a bullish outlook. What’s your outlook for commodities?

Jeffrey Christian, managing director, CPM Group (Christian): Right. Commodities are radically different from gold. And our view, again, looking at the economy, our view is that we are going to see a significant slowdown in the U.S. and China and maybe some other economies in the second half of this year. We don’t think we’re going into a new recession. We don’t think that we’re going into a double-dip, although the risk is higher now, than it seemed three months ago.

Our expectations – for example, U.S. GDP, which was running 3.5-3.8 percent in the first half of this year, probably will run 1.5-2.0 percent in the second half, and then pick up in 2011. And in China, you’ve been running north of 11 percent real GDP. Maybe it comes down to between 10 and 11 percent in the second half.

Europe actually is doing a little bit better, relatively, first half/second half, simply because the first half was so pathetic for Europe. But Europe is showing some strength. And so, what we think we’re seeing …

Norman: There’s going to be austerity and spending cuts and all kinds of what are potentially very deflationary policies in Europe.

Christian: Not only in Europe, but in Japan and the United States. And you put that together with the slower real growth in the United States and China, and you could have a softening of markets. And I think you're seeing expectations of that in the commodities markets already. So, the prices are coming off a little bit.

We don’t think they’ll fall too far, but we think that in the second half of 2010 we’ll see some softness across most commodity markets. And then as the world economy and the U.S. economy picks up steam in 2011, we would expect commodity prices to start rising again.

Norman: What effect, if any, do you think we’ll see from the de-pegging of the Chinese currency to renminbi from the U.S. dollar? Some would argue that it could have an impact on Chinese exports, on the Chinese economy; it could have a slowing effect. What effect on raw materials and commodity prices do you think that’ll have?

Christian: I think it’s going to be relatively minor; maybe a quarter of a percentage point change. Because what you're going to see is a shift in fabrication demand patterns. The Chinese have really done a solid to the U.S. by saying that they're going to allow the yuan to rise. That means that their labor costs will become a little bit less competitive against the U.S. But, it’s going to be a significant marginal difference.

And what you're going to see is a shift in fabrication demand away from China to other Southeast Asian countries, Latin American countries, the United States and Europe, to some extent. So it’s going to be probably a positive for real economic growth. And it’s really going to be a relocation of the shift in demand.