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Gold as Safe Haven for TD Bank’s $230 Billion in Assets

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Toronto-Dominion Bank’s chief investment officer, Bruce Cooper, is changing the firm’s outlook to conserve capital by moving funds heavily into gold. According to Bloomberg, TD Bank oversees more than $230 billion in assets, and has “shifted to a ‘maximum overweight’ in gold for its portfolios.” Cooper oversees TD Asset Management, the investment arm of Canada’s second-largest lender.

So, what’s caused Cooper’s course change? The usual suspects: a sluggish global economy, the Brexit vote, central banking policies, and the upcoming US presidential election. All have contributed to TD’s overall feeling of uncertainty.

Within TD’s portfolio, gold promotes “diversification, stability and protecting against deflation more than returns,” Cooper said. “Job one today is about capital preservation. It’s not about shooting the lights out.”

For Cooper, gold investment is about playing it smart, not about being a doom and gloomer. “We’re cautious but not negative. This is not about canned goods and getting in the bunker,” he said.

Gold's Glittering Rally: Metal's rebound feuled by low interest rates graph from Bloomberg

2016’s political outcomes are also something to consider, Cooper believes:

If Germany moves away from its traditional austerity approach or Hillary Clinton and the Democrats take power in the US and unveil fiscal stimulus, that could shift the global economy into a more inflationary state.”

A Clinton presidency would almost certainly ensure fiscal stimulus alongside monetary easing in the form of low or potentially negative interest rates and quantitative easing. The combination of poor fiscal and monetary policy will further weaken the US dollar.

The morale of the story is if you do not own gold or silver it’s wise to take action before the 2016 elections. Physical coin supply is limited, we may experience another shortage, comparable or worse to the industry shortage we experienced last fall.

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