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Gold “Relatively Cheap” Compared to Other Assets: TD Securities Head

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Expert says gold is still at bargain price, how Basel 3 could boost gold and silver prices, and what’s next after gold’s breakout.

TD Securities: Gold is “relatively cheap” compared to what could come

On May 20th, TD Securities’ head of global strategy Richard Kelly reviewed gold’s current price ($1887) compared to currencies in the current economic outlook. As Kelly noted, gold had quite a pullback from its $2,070 August high, falling to as low as $1,650 at certain points but mostly sticking to the $1,800 level.

Kelly believes this pullback might have frightened investors away from gold despite the metal’s tailwinds remaining in place:

Gold had a phenomenal run-up over the course of last year, and when that reversed, I think it scared a few investors off.

As he explains, the downwards pressure came along with a sudden rise in Treasury yields, one that seems to have caused investors to overlook the true state of the bond market. Optimism came quick as traders started believing that the Federal Reserve might start hiking interest rates as well as reining in its ultra-loose monetary policy in order to head off inflation.

Yet the Fed has consistently promised there’s no intention to start raising interest rates any time soon. Kelly himself believes that many of the top currencies, including the U.S. dollar as well as the euro, are showing undeserved strength (despite the dollar’s recent weakness). This is supported by the sheer scope of monetary supply expansion that has occurred over the past year.

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