Strategy & Insights

For the week of March 3-7 markets reacted negatively after President Trump imposed tariffs on Mexico and Canada igniting fears of prolonged trade war. These are the top-performing BMO ETFs that proved resilient in one of the steepest drawdowns so far this year.

Since the beginning of 2024, the spot price for Gold has risen by near 40%. That is quite the feat considering that most central banks had stopped hiking rates last year, and the availability of higher yielding instruments should have meant that a ​‘zero yielding asset’ such as a precious metal should have consolidated at the very least.

Nevertheless, we’re not here to diagnose what led to these remarkable gains. Instead, our focus for this note — which also dovetails nicely with the one-year anniversary of the launch of the BMO Gold Bullion ETF (Ticker: ZGLD) — is to examine whether or not we should expect to see further upside from here. And after careful thought and deliberation, we identify three reasons for optimism as well as one important risk to monitor.

As each day passes, we grow ever more concerned that tariffs are becoming a more mainstream concept at all government levels in the United States.

Indeed, there is a compelling reason for Republicans in both chambers of Congress to consider tariffs to solve an important problem. Namely, that the ability to extend tax cuts while trimming the bloated budget deficit looks increasingly untenable without tariff-related revenues.

In this note, we’ll quickly rehash the current state of affairs when it comes to the budget resolution process that is underway in both the House of Representatives and the Senate. Then we’ll go over why it may become difficult to extricate tariffs from tax cuts over the coming months – even if there are additional tariff delays from the White House. Finally, we offer three takeaways for our readers as well as ideas to take advantage of an environment where tariffs become a more permanent fixture.

In the markets, the theme of ‘American exceptionalism’ has received a lot of air play of late – and for good reason. Over the past two years, the benchmark S&P 500 has increased by at least 25%. In fact, since the end of 2018, the index is up by close to 160% with an average annual return of 18.6%. With all due respect to the other large developed markets, it’s only in the U.S. where an investor could have hoped to sniff numbers like that.

All prices, returns and portfolio weights are as of market close on December 31, 2024, unless otherwise indicated.

Into 2025, one of the more pressing questions for Canadian investors is whether or not to hedge FX exposure to U.S. assets from here.

All prices, returns and portfolio weights are as of market close on September 30, 2024, unless otherwise indicated.