Market Insights

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.

coming up on today's show, the threat of inflation, a key theme in the markets this week.

We are going to tackle some of the big issues with our MoneyTalk panel, Anthony Okolie and Susan Prince are standing by.

Speaking of inflation, the price of oil on the rise again, among concerns of higher cost for consumers. Bart Melek of TD Securities breaks it down for us. Plus in our education segment, Hiren Amin is going to tell us about what a moving averages and how you can add them to your chart and start doing some technical analysis.

Before he gets all that, let's get you an update on the markets. Last trading day of the week. The price of gold soaring today a and the price of oil firming.

The gold companies are really getting a bit today. We are down 31 points, little more than 1/10 of a percent. Among the most actively traded names include those gold names which are getting a bit today with the price of gold going even higher on geo-political risk. Barrick Gold up about 2.5%.

Cenovus Energy last time was making gains.

It is holding. To add $29.41, Cenovus is up a little shy of 2%. South of the border, banks earnings season has kicked off.

J.P. Morgan among them. We will talk about them later. Shawn Porter, but they have concerns including Jamie Dimon on the state of the world and interest margins.

Put it together in your down 47 points, almost one full percent for the S&P 500.

Tech heavy NASDAQ, bit of a surprise, bunch of buyers moved in during the session and push stocks higher. We are reversing now, down 181 points, a little more than 1%.

J.P. Morgan had a strong quarter but down more than 5% right now, $185 and change.

And that is your market update.

One of the big issues for markets this week indeed for us for quite some time, the ongoing battle against inflation. The Bank of Canada appeared to be making progress on its mandate but a bit of a different story South of the border.

Let's take a look at some of the big stories on our radar here with MoneyTalk DIY editor Susan Prince and markets editor Anthony Okolie. We have a few things to get to. We will start with inflation.

There were expectations from investors heading into this year about the fight against inflation and what it meant for interest rates.

I don't know if they are being turned on their heads but they've definitely been deferred.

>> We saw that with the markets on Tuesday when they were announced. We had all items of 3.5% and the anticipation was 3.4%.

But the market reaction, holy Hannah, it just went way down and was like, no, no that's not what you told us it was going to be.

I like to roll back and say, what do we know about inflation to be true from our day-to-day living?

Because these numbers are not someone choosing them.

The Bureau of Labor Statistics is not pulling them out of a hat. It is our day-to-day living.

Some things, food away from home, up 4.2% year-over-year. We have felt that.

Yeah, okay, that makes sense. Airline fares down year-over-year, 7.1%.

There was that pent-up demand last year for travel and now we are starting to see that even note.

Recorded music and music subscriptions up 4.2%.

We are seeing inflation in funny, sticky areas.

>> I want to pick up on that point because you talk about inflation. We are also seeing it in services and the Fed seems to be focused on this idea of super core inflation… >> Super core, so we get headline and then core and now Anthony is taking is even deeper into super core.

>> Super core inflation seems to be a metric the Federal Reserve is focusing on.

It is really zooming in on prices of services which have been persistently high and you talk about things that we feel day-to-day, plumbers, gardeners, hairdressers, not so much myself, but these things remain really high. Super core zooms in on the costs of labour so the Fed can better gauge the impact of wages on prices. When we look at the Fed super core inflation measure, which excludes rent, it's up 4.8% year-over-year and on its three month annualized basis, more than 8% in March, that is the highest in 11 months.

This is a big problem for the Fed because in a tight job market, companies are forced to pay higher wages to keep their workers, they pass this on to consumers and it fuels further inflation and wage hikes and something the Fed does not want.

>> We had that inflation print out of the states and it was a disappointment for the market.

We dig deeper into super core, even more disappointed and even more challenging.

Here at home, the Bank of Canada howled but what are you going to tell us about the path forward?

I don't know if you felt the same thing but when I read to the statement, I was like, you need to see more evidence of inflation being subdued, you need to see more evidence, and right out of the gate, Tiff Macklem was asked, are you going to cut in June? He said it was within the realm of possibility. Very interesting.

>> This trying to let people know in advance, sort of, so you can think about what the expectations are, what that means for small business, what that means for mortgage holders.

And that ripple out but it is interesting to see where Macklem wants to say, he wants the lower inflation to be sustainable. We've had January and February below 3%.

We are starting to get into that range of the Bank of Canada being happy if inflation is at 2%.

We are getting closer to that.

So what will cause him, not him alone, but the Bank of Canada to say, yeah, we are good with this, and we think we don't want to do too much and squeeze out the economy but we don't want you behaving like this is a gambling… >> Fait accompli. I wanted to say something fancy. Fait accompli.

>> I say it's like a gambling debt. People are wagering.

The Bank of Canada is saying let's step away from this feeling like a wager. Let's be prudent about it.

Let's make sure we don't have that ricochet warehousing prices start to go up even more if the bank rate comes down. The things that we are trying to get back on track don't have a rebound. So it's an interesting balance.

>> Anthony, as much as Tiff Macklem said June as is within the realm of possibility, I'm pretty sure that TD Economics and TD Securities are still more thinking it's a July story.

>> Exactly. I think they feel that, the Bank of Canada still needs to see some indication that inflation is coming down.

Another thing that I took from the Bank of Canada meeting is that we are hearing talk about divergence between the US and Canada in terms of interest rates and the economy. We've seen a widening.

It's not just between Canada and the US but also between Canada and the ECP. We saw the ECB president come out and stress this week that the ECB could cut rates before the US Fed if needed and she also said we are data dependent, we are not Fed dependent.

There is more interest in distinctions.

>> The Bank of Canada trying to make a decision about when they want to deliver the sky.

There is an interesting point raised by guests this week. By the time we get to the next rate decision, the central bank will also have the federal budget. They will be able to figure out what is the fiscal side up to, which will inform the monetary side. We have a budget next week.

James Orlando, I think he was on Kim Parlee's show. He gives you things to listen for.

>> What happens to the government when they have that money? Do they keep that in their pocket? Is it burning a hole in their pocket? Or are they going to spend it?

Every day, the government has come out with a new announcement saying, he is a new policy, something new that we are going to address in the economy.

They might be talking a lot about restraint in the upcoming budget but everything we are hearing right now is: get ready for more spending to be coming.

>> James they're basically saying to think in terms of we have had a lot of pre-announcements for this budget, farm care, housing initiatives. We have the fiscal position is a bit better but at the same time, there's a bit more spending.

Try to figure out where does that leave us.

>> They are talking a lot about spending, we heard about farm care and housing as well. I think that in this budget, TD Economics has talked about that, there will be talk about that, but beyond things like farm care, the other areas might be a bit scanned because the government may want to maybe save some firepower for the reelection budget.

I think their concern is that they don't want to see the deficit exploded, the debt to GDP exploding before the election coming up.

>> What are you watching for, Susan?

>> I'm really watching for what the reaction is more than what comes out of the budget because we are seeing a lot of information and how is the public that right now isn't loving the liberal government that much, are they going to be appeased by this?

Budget sometimes attempt to do that. I will be watching for what the reaction, what people feel about that in their day-to-day lives.

>> See if the support ability measures make a difference. As you said, real people and the real economy. Always a pleasure, Susan Prince, Anthony Okolie.

Of course, we mention the Bank of Canada decision earlier this week. I talked about that with Andrew Kelvin, head of Canadian and global rate strategy at TD Securities.

I asked him about the difference in the town between the statement and the press conference.

>> It's an interesting contrast because the statement, the press conference and the statement as well, they are pretty cagey and the NPR I thought would lead into some of the more positive data more heavily than expected. Assuming the BOC was try to put forward a message for they were continuing to see progress but they wanted to keep all their options open and then as he said, first question of the press conference, he was asked if June cuts were within the realm of possibility and after a bit of humming and hawing, he said yes which in some respects is not an obvious thing to say. June is two months from now.

June had been priced at a 50-50 chance were cut going into this meeting. It's unusual for a BOC governor to say that.

When asked about coming meetings, usually they say they will not comment on the next meeting or take it meeting by meeting or will have to take a look at the data. You don't usually get that transparent yes or no answer. That was an interesting thing to see. Now, is it the most likely thing?

We still think July.

The question for the Bank of Canada is how much evidence today need to see to be confident that the progress we've made on inflation will be sustained?

Now they are talking about needing to see the current or realize progress in inflation sustained. The current economic backdrop is probably consistent with lower interest rates. They just need to be sure that this inflation backdrop will persist and it was in one or two months of one-off downside surprises because Canadian data is always a little bit volatile and becomes almost this philosophical question of how much evidence is enough?

We think they will be more comfortable going in July if only because given that we have been overshooting the inflation target for several years now given where wage growth is, where inflations are because they have not normalize yet, we think they prefer to err on the side of caution. We think they would rather hold that 5% a little bit too long then cut a little bit too early, particularly with entering the spring housing market.

We still think July is more likely but certainly the conversation should be in our view around a midyear start to the easing cycle.

We think July, June being the second most likely.

>> If they do start in July, what does the rest of the year look like? Are they of course to cut every meeting or will it be cut, step back and see what happens and then decide whether they need to go again?

>> Historically, a one-off cut would be very rare. It has happened before in 2016 but it would be a very rare saying and going from what is a restrictive policy stance, going from 5% to 475 and pausing would be a bit of a strange message to the market.

When the BOC does start cutting, we think we will see at minimum to 25 basis point cuts in a row and from there, it really will depend on the response. Q1 data for this year has been strong. We don't think that will last. We think we are going to get for 25 basis point rate cuts this year. We think we will get to 4% by the end of this year but that will as always be just a product of how CPI performs and how the economy holds up.

>> Now as Canadians, we are accustomed to the Americans having the bigger spotlight.

They sort of beat us to the punch with the big market news this morning. They came out there inflation report and it is not moving in the direction that markets want to see. The market reaction was clear on that.

Does this complicate things at all for the course of where the BOC is going us Americans are in a situation where they are pushing out cuts?

>> Not in the short term. The economic reality between Canada and the US is very different.

Last year, US GDP growth, on a Q4 to Q4 basis, outpaced Canada.

The Bank of Canada can diverge for periods of time.

Given that the economic realities on the ground in Canada are a bit weaker than they are in the US, I don't think whatever that happens to do will really impact the timing of the first round of BOC cuts. Not impacted by very much.

We are all human.

If the Bank of Canada, the Fed is between cutting in June or July or July and September, the Fed can influence it for sure.

But when we talk about cuts in the US, we talk about a world where something doesn't change.

In Canada, we have already seen a softening.

So I think there's a fair bit of scope for the Bank of Canada to operate independently for the first part of an easing cycle. Now, if we get down the line and the Federal Reserve stays on hold for quite a long time or there is an extremely shallow easing cycle in the US, that would have impacts for the next round of rate cuts from the BOC because while the BOC can get to 4 1/2 or 4 1/4 without the Fed doing anything, I think it would be strain credibility to suggest that the BOC is not at any point bound by what the Fed does. I think that's more of a conversation for 2025.

>> What you make it the discussions now south of the border that based on the strength of the labour market, the inflation print we got today, that not only higher for longer but we had a Fed speaker say, maybe we don't have any cuts this year or even a hike at some point. We did not have this mindset entering 2024.

>> The mindset we had entering 2024 mirrored the mindset we had entering into 2023. The economy is in a softer place globally now than it was in 2023. I don't think their way to see a repeat.

I would note that unlike the Bank of Canada were everybody tries to speak from the same script, although the governor acknowledge there is a diversity of views in the room right now, those comments from the Fed about maybe we won't see hikes, I would not take that as symptomatic of something that's being discussed seriously in the Federal Reserve. Monetary policy is always a backward -looking exercise. We have this idea of where neutral rates will be, where the long-term steady value is for overnight rates. If there is in moderation, that would undercut the case for the magnitude of rate cuts that we expect that at the end of the day, if the economy is humming along just fine, why change things?

So I think that's a really interesting conversation in the US that is not happening to the same extent as in Canada.

>> That was Andrew Kelvin, head of Canadian and global rate strategy at TD Securities.

Now, will stay updated on some of the top stories in the world of business and get you updated on how the markets are trading.

Kick off to U.S. Bank earnings.

J.P. Morgan done a little more than 5%.

Investors appear to be focusing on interest income guidance. An estimated $90 billion, J.P. Morgan has left its guidance essentially unchanged.

On the earnings call as well, the CEO said that the unsettling geopolitical situation exposing threats to the economy.

Corus Entertainment is warning investors of a continued weak advertising market for its business. The TV and radio broadcasters forecasting a year-over-year decline in ad revenue up to 15%.

Courses reporting a loss of nearly $10 million for its most recent quarter as its revenue fell some 13%. You can see the stock pulling back up by a substantial 18% today.

Another stock under pressure today is MTY Food Group. The food court and franchise operator saw its profit fall more than 6% year-over-year on softer sales.

MTY, which operates restaurants under more than 90 banners across North America and internationally, is pointing to weaker consumer spending and extreme weather.

They are down 10%.

Checking in on the market, there is a price of gold surging today.

Not enough to keep the TSX Composite Index headline number out of the red. Down about one third of a percent. South of the border, let's check in on the S&P 500. We had the rally and take names yesterday.

There was some buying on the dip happening. That is reversing today. We are down 54 points, about 1%, with the NASDAQ down about the same amount.

Continuing with our inflation theme for today show, the price of oil has been on a fairly steady climb, up more than 20% year to date. Much of those gains are being fuelled by geo-political concerns.

Kim Parlee spoke with Bart Melek, head of commodity strategy at TD Securities, about those tensions in the outlook for oils.

>> On the one end, we had Saudi Arabia and OPEC+ broadly continue to restrict supply.

They committed to continue their 2.2 million barrel per day reduction the rest of the year. We have seen discipline. On the geopolitical front, we are seeing tensions between Iran and Israel not at a boiling point quite yet but the market is quite cheerful that what we could see is an escalation that could at some point potentially lead to disruption in oil flows. We have seen that in the Red Sea, through proxies and this could happen again. So that's another factor. And of course, there is another geopolitical cyber we have had Ukrainian drones directly attacking refining facilities in Russia and that's reducing supply of distillate that indirectly made our way by avoiding sanctions. That means that if distillate supplies continue to be disrupted, I have no idea, but the market is worried, it could mean higher crack spreads and more problems in certain parts of the world.

That could cause even tighter markets. We are expecting deficits for the balance of the year.

>> On that front, we heard the US trying to put pressure on Saudi Arabia in terms of increasing their output because of their concern about these deficits and how it will affect consumers.

>> It's an election year. Washington has never been shy about asking Saudi Arabia to step up production. But it is fair to say that Saudi Arabia has a very similar set of incentives as Washington.

They have 2 to 3 million barrels of spare capacity that they can put into the market and I think if we see prices rising to around $90 which is where we are at today, they don't necessarily want to see crude go much higher than it is, they don't want to destroy long-term demand. They don't want to see incentives for jail producers to put money in and eat their lunch.

>> They are at a sweet spot right now.

>> Yes, but today, the agency upgraded its supply forecast. I don't know if that's directly linked to that 20% increase but I am quite sure that Saudi Arabia and OPEC+ are looking at this and I think there's from the Saudi perspective, aside from all the expedient market musings that they want to get a higher price but I think they for the most part made much of the sacrifice. Market share has eroded for them. They are likely to get it back.

They probably think that they should be the ones that capitalize on it, not anyone else.

So from that perspective, I think they will, at a time of their choosing, not Washington's, choose to do this. It Washington has to spend on the resettlement program at the strategic petroleum reserve. Washington is concerned especially in an election year where it never bodes well for the party in power to have oil prices skyrocket.

>> Let's talk about the demand side because every time we see a divergent path with Canada and the US, the US is chugging along and you're starting to see some momentum and steam gather.

>> We have had the number last week and it came out as 300,000+.

I'm not even sure the market is convinced that we are going to get a soft landing.

Maybe we won't get a landing at all.

>> Maintain flight and go back up.

>> The so-called restrictive monetary policy, there is a fiscal side that is propping things up. Credit is still available. There is plenty of liquidity.

It seems equity markets are on a tear and I'm quite confident that economic theory is correct that higher interest rates will slow things down. The question is, what will that happen? Demand globally will be just fine, thank you very much. Our forecasts are criticize sometimes for being too… Millions of barrels of new demand we could certainly be there without any difficulty we went long and were up for all the reasons we spoke about previously.

>> I've only got about 30 seconds but on that, what are you looking for prices to be over the next… You tell me what your time period is.

>> Prices could go above 90 or triple digits by the end of the year.

I don't think Saudi Arabia is in a hurry.

We could very easily see the US Federal Reserve deliver on cuts in the middle of the year, June, July. Possibly, that will get some speculative money.

There will be carry cost.

Probably demand expectations may go higher and I'm really worried about Middle East tensions and problems with potential more destruction of refining facilities and that's really my only concern and the escalation of tensions and the actual bombing of facilities might get us there and at that point Saudi Arabia will probably take the higher prices and will probably inject more supply.

>> That was Bart Melek, head of commodity strategy at TD Securities.

Now, let's get our educational segment of the day.

Alright, if you are thinking about looking at charts and price action, technical analysis, you need to get familiar with something called the moving average. Hiren Amin, Senior client education instructor at TD Direct Investing is here to talk about that and how to add them to charts.

Take it away.

>> Great to see you.

Let's talk about moving averages.

You mentioned technical analysis. Let me talk about one of the central tenets of technical analysis that gets traders attention towards it and that is trends.

We know of trending things in this day and age. I'm not in tune with what the Gen Zer are in tune with.

Let's walk you through moving averages because that's one way we can identify trends.

I have the triple Q loaded up here. It's an ETF that tracks the broad market technology sector.

Or the NASDAQ index. Let's do this. There were to pull bar charts now. First things first. When you are trying to identify a trend, you want to focus on something that's going to show us in a time frame of a year or more. You can see in frequency, I have it set up for one year and now I will set it up to one days price action that we will see.

To add a moving average, we will go to this drop-down which has upper indicators and you scroll down. There are a few different names that you're going to see that have moving average. The one I want to introduce everyone to you is simple moving average.

Once you found this loaded in, what you want to set is the timeframe you want to analyse.

The moving average is adding up the different closing prices of what you want to look at.

The one traders usually focus on the 200 day one.

I will put into hundred days.

And we are going to hit update chart. It's a little bit different.

It is well below the price action.

This is another place where traders will use these moving averages first of all to see what direction the stock is moving in.

We could see the NASDAQ is moving in this upward trajectory or trend but it's also useful for trading signals.

The way traders would look at this is that they would also see the price action so when we talk about price action, we are talking about the scandals over here.

When it crosses about the moving average as you can see in this instance in March 2023, this would have been a bullish signal for traders. In a similar manner, if it crossed below the 200 day moving average, it would have signalled a bearish signal.

Keep in mind when you see these, they are not to make your decision. You are not relying on this simply to make your trading decisions on a single cue that comes up. You want to look at other indicators to get the confidence to see.

Another thing you can do is add another moving average.

We are when you click on settings over here and we got another one here, we will do 50, this is commonplace, the 50 day moving average which is about 2 1/2 months of trading days and then click update chart. By adding a second overlay, to further get that confirmation is when you see the shorter term moving average in this purple, we will zoom it up and bring it more into the Centerview.

When that crosses over, the long term moving average is another bullish signal.

If you have a shorter time frame crossing over a longer term timeframe, that's another signal.

This is a key signal for traders. The golden cross.

When the 50 day crosses below the 200, that is called a death cross.

This is a quick spiel on the moving average on how you can set that up and find those trends.

>> For viewers who have never considered technical analysis before, those of the first steps into what is a much larger world. Where can they go on what broker to learn more about trading signals?

>> I thought you would never ask.

We pride ourselves in delivering high-quality education and making sure that we get the tools our investors.

To start with, if you're getting into more technical analysis, one place I would start with is going to this tab that says technicals. This is where you get some handholding. If you are trying to understand these moving averages are see how to identify them a bit better, even come in here and see there are a number of different events that will show up here.

There is a moving average crossover, there is a price crosses moving average. It gives you the background. But we also have the sole graduation Which brings you to our education page and here's where you can see, you can go through a number of these different indicators where you will see crossovers and we are discussing the double moving average. This is one place you can check.

Don't forget to go to the learn section over here. You can check out our video lessons and certain of anything technical.

Go into filters and you will see there are a number of different categories. You can select technical analysis and choose the content. You will see content related to technical analysis that you want to see.

We have our own YouTube page. Don't forget, we will put the QR code up there, it's the world. Please visit our content.

You will be able to keep up to date with the latest happenings in the investing world and we have some great videos to run on there. Subscribe to our YouTube channel.

>> Great stuff as always. Thanks for that.

>> My pleasure.

>> Hiren Amin, Senior client education instructor at TD Direct Investing. And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.

Now let's get you updated on the markets.

We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing. This is the heat map function.

Gold was up more than $50 an ounce. Lifted some of these mining names dramatically earlier in the session.

At one point some of these names were up five or 6%. We are starting to see a pullback in that right now.

The financials are not doing us any favours on the top line TSX competent number.

We are dead but 56 points right now on the TSX Composite Index.

South of the border, we have some right on the screen.

We went to narrow in on the S&P 100 and see what's up late today.

Right away, the chipmakers are standing up to me. AMD is down about 4%, Intel down also down 4%, and in videos down about 2%, taking points off the table.

But it's also the kickoff of another earnings season south of the border which won't be far behind here in Canada.

The big Wall Street banks traditionally kickoff earnings season as they did today.

There are concerns, J.P. Morgan down a little more than 5%. Not that they didn't have a strong quarter behind them, they beat on the top and bottom line numbers, but their projections are more bleak.

As always, make sure you do your own research before making any investment decisions.

Let's talk a little bit more about that CPI data we got earlier this week. It was hotter than expected. He put a bit of a damper on the markets including the price of gold, albeit briefly, some other things moving gold obviously.

It is hitting new milestones. Earlier I spoke with senior quality strategies Daniel Ghali@TD Securities about the outlook for gold.

>> This is probably one of the most exciting times in precious metals were a number of reasons.

We spoke earlier this year about the fact that macro traders started the year with a historic dislocation.

They were historically under positioned ahead of a fed cunning cycle. That's what propelled gold to reach new all-time highs but at the same time, in our view, that buying activity ran out of steam by the time gold prices reach 2200 per ounce.

The buying activity since then actually points to some mysterious buyer which we think might be associated with currency intervention ongoing in China.

>> One of the things we have talked about over the past year and 1/2 or so was central bank buying in this idea that there was some concern about currency markets and people were getting back into gold. You're saying there is a mysterious buyer. Let's dig deeper. You think the fundamentals played themselves out but the buying continues.

>> What's curious about the buying activity so far this year is that said cuts are being priced out but gold prices are rising.

The US dollar is rising, gold prices are rising. Real rates are rising, but gold prices are rising. The traditional playbook that investors look out for gold is not working out.

There is a valid reason for that. We spoke about the fact that they were under positioned and the under positioning has resulted self-doubt.

They are holding as much gold as you would expect given the fed outlook. But at the same time, there must therefore be something else that's going on.

In our view, if you're ready to get really nitty-gritty, you break down the fact that there is no evidence of this buying activity from 2200 and analyses today's prices that is showing up on exchange data, nor in the US, nor in China where the largest traders in China are selling them. You also have evidence that the very strong physical market demand that was coming from retail consumers in China is now subsiding with wholesale demand in China starting to come off after an exceptionally strong start to the year.

So who is this mystery buyer? We know that it has extremely deep pockets because the scale of buying that it must take it for this type of rise in gold prices.

It's most likely associated with the central bank. What's curious about that is that there seems to be a sense of urgency behind this particular buying program which is not typical of what we've been discussing over the last two years.

It's been at least since 2022 that central bank buying is hitting records but the level of aggression in terms of this buying program is not typical of what we have seen over the last two years. That's what leads us to believe that it might be associated with some form of currency intervention.

>> When it comes to central bank buying, the street buyer, the big big, does this but the rally at risk? You have said we have outstripped the fundamentals. Gold is moving like a tech stock.

You expect to see moves in gold and not the kind of rally we have had.

>> Certainly, at least not in this current macro context which is one of our yes inflation is coming in hotter but the market is pricing out rate cuts so what I'm spending the most of our time on on the strategy side is trying to figure out whether this buying activity has simply lifted the floor on gold prices or whether gold prices will not be able to sustain the recent gains once this buying activity dries up.

>> If the buying activity did dry up, would you anticipate a sizable correction or just sort of a leveling out of the tree? What could happen with the price of gold in the near term?

Recently don't understand what's going on, it sounds like.

>> It increasingly looks like the mystery bid that has propelled gold from 2202 current prices is unlikely to sell their newly acquired gold if it is indeed a currency intervention. It is not like that central bank will turn around tomorrow and sell all of the gold they have acquired.

What that means is it might just simply be lifting the floor price on gold and once that buying activity dries up, the remaining path for gold will depend on how the macroeconomy evolves.

>> Gold is an interesting one. I'm glad we have you here on a regular basis keep on top of all of these very intriguing developments. One about the movement in silver as well?

Often called the poor man's gold.

>> Yes, the move in silver markets might just be the exciting energy transition theme in the commodities complex today. We spend so much time talking about copper and oil when it comes to the energy transition but so little attention is placed on silver. We think that over the next year or two, one of the major assumptions that underlie silver markets is going to be challenged. Here, I am referring to the fact that for the longest time, physical supply, surplus or deficit, did not really tend to matter for silver markets. The reason it didn't matter is because you tended to have at least 1.6 billion ounces of silver sitting in inventories so that was always ample enough to fill the gap for the physical market deficit. The challenge today is that you have significant erosion in the amount of silver that is actually available for purchase.

Within those faults and particularly in London which has the largest bully and vaulting system in the world, about 75% of those inventories are earmarked by another holder.

The London bullion market is 75% of the world's inventory system but a significant portion is earmarked by ETF holders, for instance. That leaves a significantly smaller portion of silver inventories that are actually freely available. The challenge here is that the universally recognized deficits expected by markets over the next few years might just erode those inventories in the next 12 to 24 months.

>> I know you are not a mining analyst but if we are talking about tight inventories, is the mining industry keeping up with what could be silver demand in years to come?

>> Here's what's interesting as well is that silver is one of those metals that is primarily mined as a byproduct.

People that mind sink or lead or gold etc.

and up mining silver at the same time.

What's funny about that is that it's actually one of those commodities that tend to have a structural seller since it is mind as a byproduct, minors tend to sell it as it's not their primary asset for their stockholders.

>> That was Daniel Ghali, Senior quantity strategist at TD Securities.

That's it for our show today. Next week, we will have conference of analysis, reaction to the federal budget which comes out on Tuesday.

That will be available here on the web broker platform. We will get a reaction from TD deputy chief economist Derek Burleton as well as Nicole Ewing, director of tax and estate planning at TD Wealth.

That is all next week at MoneyTalk.

And a reminder that you can get a head start.

Just email MoneyTalkLive@TD.com.

On behalf of me, Anthony and Susan in front of the camera and everyone behind the scenes that brings you the show every day, thanks for watching and we will see you next week.

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