Global central bank printing presses are more positive for the commodity sensitive TSX than other sectors. The liquidity boost has scope to last through early 2013, but it will most certainly not be a straight ride higher as it was widely expected (except for us that argued it would not come until 2013).

The magnitude of the potential 1.4 trillion of MBS purchases through the next 3 years could easily push gold $500-1000 higher over that horizon. Gold will tend to rally strong when economic data is weak and will sell off when key economic data improves, specifically anything related to job growth. That will most certainly help the TSX gold sector, but we expect a relative longer-term weakening in gold equities versus gold bullion to continue. At the recent trough, gold shares were near 20-year valuation lows versus bullion.

With geopolitical tension rising again in the mid-east, we could see a premium sneak back into the crude oil markets too, but do not look for energy equities to fully reflect the higher valuations.