TD Waterhouse Predicts That Gold Will Move Higher

TD Waterhouse research says the main drivers for gold's rise include an unexpectedly dovish Fed, a weaker U.S. dollar and rising political uncertainty.

Short term trends have been favorable to gold in May, with bullion currently near its one-month price peak.

TD Waterhouse research says the main drivers include an unexpectedly dovish Fed, a weaker U.S. dollar and rising political uncertainty.

“Given the current political circumstances and emerging uncertainty surrounding US rate hikes and broader monetary and fiscal policy, we believe there could be further room for gold to move higher still,” TD Securities analysts wrote recently. “The yellow metal may well trend toward a technically determined high.”

With this kind of backdrop for our current national mood, it isn’t surprising that safe-haven assets are getting attention from retirement investors.

Political Tensions with North Korea

Global political tensions are at a feverish pitch with North Korea conducting threatening ballistic missile tests. The sanctions against the isolated nation just announced by the U.S. and Japan are as clear and firm as they can be.

Unfortunately, they still seem unlikely to blunt North Korea’s dangerous thirst for respect and fear from the rest of the globe.

“Political uncertainty has traditionally helped gold and the precious metals complex,” TD analysts wrote. “It is likely that [North Korean aggression] will have a material and lasting influence on the economy, equity market outlook and central bank monetary policy action.

“As the market starts to increasingly question the Fed’s determination to pursue a robust monetary policy tightening into 2018, gold should benefit further.”

TD Waterhouse also issued a warning for investors in the stock market, which has risen rapidly on the promise of swift economic and tax reform by President Trump.

TD analysts believe that the current administration’s anticipated tax and economic agenda “has no chance of passing anytime soon.” The constant battle against investigations could simply consume too much of the considerable political capital needed to pass the legislation.

“This suggests a flattish yield curve, low interest rates, a moderating U.S. dollar and an equity market which could be subject to a correction, all very positive developments for the yellow metal,” TD Waterhouse said. “Safe-haven buying may accelerate.”


Major long term trends are developing for physical gold, according to the World Gold Council:

Investment demand: Gold demand from investors has surged 122% year over year. This is a reflection of the shift to safe-haven assets we are seeing from both individual and hedge fund investors.

Falling gold mine production: Global mining reports show large haircuts to capital expenditures by some of the world’s largest gold miners. Year over year gold supply was down -12% in Q1 2007. Global gold mine production could drop by 20% by 2022.

Geopolitical uncertainty: Geopolitical uncertainty in North Korea, China, Europe and even America is causing investors to consider alternative safe-haven assets like gold and silver. As a close neighbor of North Korea, China’s demand for gold bars and gold coins is up 30% year over year.


Colin Ciesynski, chief market strategist at CMC Markets, points to increasing political uncertainty as the current key driver for rising gold prices. According to Ciesynski, three factors have sent investors to buy gold: last week’s contentious NATO summit, the potential for more trouble at the upcoming G-7 Summit and a tightening U.K. race. Leaders of the world’s richest nations face difficult talks with Trump in Sicily.

The Citi Economic Surprise Index, which tracks economic data against predictions, is running at a 15-month low.

Ed Yardeni, head of Yardeni Research, notes that after the election nobody wanted to bet against Trump’s predictions. Expectations were high: a possible revival of economic growth to 3 or 4 percent a year. Now Yardeni thinks it is looking more and more like a stretch, despite President Trump’s best efforts.

Paul Singer of Elliot Management believes it could be just a matter of time before the president fails to make good on one or more of his policy promises. This could well jolt markets violently lower at any time. According to Singer, recession is likely and the Federal Reserve has no room to ease as it did in the 2008-2009 financial crisis.


At home, political hyper partisanship has replaced common sense. Abroad, North Korea and ISIS are testing global stability and security with long-range missiles and suicide bombings.

Gold and silver have a long history of being a true store of value and not beholden to kings, empires or any authority whatsoever. They are private and yours to distribute as you will. Gold protects your privacy and cannot be hacked or erased.

Don’t bet your whole future on paper-based assets, which have values determined by corporate suits, central bankers and politicians. If and when the next crisis hits, investors who have diversified with gold and silver will have reason to sleep better at night.


Get Your Free 2024 Guide
Most Recent News