The Fed Cannot Stop Inflation-Gold Will Shine
Adam Hamilton: The Fed Cannot Stop Inflation, Gold will Shine
Palisades Gold Radio: 4-18-2023
Tom welcomes back Adam Hamilton, founder of Zeal LLC. a newsletter service and is a market speculator.
Adam discusses the seasonality in gold, which typically sees three different rally periods each year, similar to agricultural commodities. However, there is no fundamental reason for gold's spring rallies - it seems people are simply more optimistic during this time, leading to more buying of gold stocks, starting around mid-March and ending around May.
Adam explains how moving averages are useful for determining if equities are overbought or oversold, and suggests raising trailing stops to preserve gains when it is significantly overbought.
He notes that the Fed is under pressure from other central banks that are pausing on hiking, causing huge problems in the economy and instability in banks - rate hikes are hitting ordinary people hard, and those with mortgages could become increasingly vulnerable.
Adam expects the Fed to hike one more time and then pause to see the impact, closely monitoring labor markets data, although he is aware that some of the U.S. BLS data is highly suspect.
Alternative data sets are showing declining labor growth, and if labor markets are far weaker than expected, this could have outsized consequences when Fed policy is mis-applied.
He believes that the dual mandate should not exist, and the Fed's focus should simply be on price stability - inflation is just an effect caused by too much money in the system, and the value of money should be set by free markets.
Silver is seen as a sentiment gauge for gold and has been doing well, although futures buying is waning.
Gold above 2000 is attracting a lot of interest.
Lastly, he discusses the miners and why investor sentiment is taking time to adjust to this new market environment.
Time Stamp References:
0:00 - Introduction
0:40 - Spring & Seasonality
6:06 - C.B. Hike Pauses & Fed
9:04 - Feds Path Forward
10:12 - Expectations & Pausing
12:22 - Jobs, The BLS & JOLTS
22:26 - Feds Dual Mandate?
24:55 - COT Positioning
28:02 - Institution Interest
31:40 - Base Effects & CPI
33:50 - Silver Markets & ETFS
37:09 - Miners & Sentiment
38:48 - Efficiency & Production
42:44 - Information Sources
46:22 - Wrap Up
Talking Points From This Episode
- Seasonality and sentiment in the precious metal markets.
- The Feds path forward and the problems with it's dual mandate.
- Silver as a sentiment gauge for gold and institutional interest.