Barry Schwartz A Comment -- General Comments From an Expert A Commentary COMMENT Jun 03, 2025

Gold is a key beneficiary of uncertainty and "chaos". It's done well since the US election being up about 20%, and YTD even more. It will continue to benefit from the uncertainty and wild swings. 

Though the market has recovered from April, no one's sure from a sector-to-sector basis what President Trump will do in terms of tariffs. Recent moves in aluminum and steel, but we're still quite a ways from understanding the overall goal and where things will ultimately settle.

All this is beneficial to gold in the short and medium terms, but at the end of the day his long-term perspective on gold is continued central bank buying. Central banks have realized the need to diversify away from the USD, which probably started with the Russian invasion of Ukraine. It woke up the world to the fact that not everything is as secure or stable in the world as you think. People are worried about US debt, running GDP deficits, and so forth. Drives people to reevaluate how they want to own the USD and perhaps diversify into something like gold.

There's a level of complacency now where people have seen the US administration come out with these dramatic numbers and then pull back in reaction to market perception. Gold is like an underwater current. There's this steady current of central bank buying, and then above the surface you have investor demand that comes and goes.

We'll see steady improvement in gold, with significant gyrations. In the last 2 months we've seen 2-3% swings in gold, which is uncharacteristic. It's due to the underlying significant inflows and outflows of ETFs, which drive the price on a day-to-day basis. 

Keep your eye on the prize of what you think is happening fundamentally over the next 6-18 months, and he doesn't see the underlying story changing.

Fairly good resistance around $60, whether it's $1 above or $1 below. Market's grappling with the demand side and whether this uncertainty, and these significant changes in global trade, will mean economic slowdown. Despite OPEC hikes, what keeps it in this fairly equilibrium state ~$60 is supply coming off. US shale production will probably decline over the next couple of years, because $60 means skinnier profits. 

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The way equity markets are positioned, we're seeing technically a new intermediate term, 3-6 month rally phase take hold. That should have upside into August.  

His team is kind of perplexed where we are in the market cycle. At the start of the year, they warned clients that a 4-year-cycle reset was going to take hold. Typically, that's a 15-20% correction lasting around 34 weeks. He thinks that's what we saw during the tariff tantrum, but the recovery was so quick. The real risk is that we are starting a cycle reset. He needs more confirmation of which way the economy is heading.

In Canada, seeing basic resources really leading the charge. Lots of interest in gold. Industrials are beginning to pick up. In general IT has been the leader of this bull run, especially in the US. It's shown leadership in Canada as well; though has come off over the last couple of months during this corrective phase, it's trying to reassert its leadership position.

The bigger allocation is moving away from the US dollar, potentially as reserve currency status. What's happening geopolitically is going to be reflected in the financial arena as well, and we're seeing that in the dollar.

The TSX made new highs, but the S&P 500 and Dow still haven't reclaimed that level. That's really positive. We're seeing the TSX take the pole position in North America. Everything he's seeing is quite positive for the TSX in general.

Seeing a catch-up trade. Pushing toward key resistance around $36; if we can get above that, next key level will be $40. Technicals on silver definitely look strong. 

Broader picture and big impetus in silver and precious metals is the USD. On the DXY, it's trading at a key level right now and testing recent lows. If you look at a 3-year chart, you can see quite clearly how it peaked near the end of last year and has been heading lower ever since. Commodities are priced in USD, so if the dollar's heading lower, that will be a tailwind for commodity pricing. Think natural gas, copper, gold, silver.

The best way to do it is to scale in, and that's what a lot of the top traders do. We're human, and we all have that fear of missing out. But then we wonder if we're buying at highs, and the rug's going to be pulled out from under us.

Define the trend, and you want a trend that's up. Within that trend, continue to allocate as long as that trend remains positive. Start with 10-20% of your total investment goal, and see what happens. If a week or two later you're in the green, that's telling you that the market's agreeing with what you're doing. You can then add more exposure. Best of both worlds. If it does pull back, you haven't allocated your full position; if it moves higher, you aren't panicking about rushing in, because you're already there.

August is the precursor to September, which is historically the weakest month of the year for equity markets. Both for the TSX and the S&P 500. You see a lot of corrections taking place.

His work shows that we've worked through the tariff tantrum, stocks are repairing themselves, price momentum is improving, and risk-on areas of the market are strengthening and accelerating. All of this supports a push higher into August.