Adam Hamilton: How Rising Rates Affect Gold
Tom welcomes a new guest Adam Hamilton. Adam is the founder of Zeal LLC. a newsletter service.
Adam notes that whenever something hawkish occurs with the Fed gold tends to get hammered down. There are several ways that gold futures can be manipulated, and one way is with excessive leverage. Speculators in gold futures generally have short time horizons because of their excessive use of leverage.
When markets sell off people rush to cash as a safe haven. This occurs with major events and whenever there is news from the Fed.
Since 1971, there have been a dozen rate hike cycles. Adam defines a cycle as three sequential rate hikes. Gold has risen during eight past cycles but fell during four. The more aggressive the Fed’s actions the worse gold tends to perform.
Gold is very useful for mitigating the effects of inflation. High inflation should boost gold’s performance. It seems unlikely that the Fed will be able to control inflation, especially at these Fed fund rate levels. Inflation has more to do with the crazy money printing over the past couple of years along with the supply issues.
Adam explains how gold has performed during past cycles and why we should see good performance from this cycle. He believes this cycle could be epic for gold. It’s also good that we’re entering this new cycle after gold has been moving sideways for a couple of years.
He discusses the differences between speculating and investing which has mostly to do with respective time horizons.
Adam discusses what he looks for in mining equities and juniors. It’s difficult for gold to respond to supply changes because of the time it takes to bring mines online. Adam looks for growth in production in mining equities. Management and jurisdiction are also key along with miners cash flow and debt levels.
Silver has had worse economics than gold miners, and there aren’t many good silver miners. Silver will respond well to higher gold prices, and potentially silver will have a better upside.
Time Stamp References:
0:00 – Introduction
0:34 – Gold Futures & Dumps
4:50 – Dollar & Equities
6:26 – Rate Hiking Cycles
10:35 – Factoring Inflation
16:12 – Inflation Causes
18:32 – Gold & Cycles
19:52 – Timing Markets
21:07 – Gold Predictions
24:50 – Investing vs. Speculating
25:16 – Picking Mining Equities
28:08 – Miner Input Costs
39:44 – Silver Miners
31:12 – Exit Strategies
33:14 – Wrap Up
Talking Points From This Episode
- Fed policies and their historical impact on the price of gold.
- Inflation causes and effects.
- Tips for finding the best junior miners.
- Silver and strategies for when to exit metals markets.
Adam Hamilton founded Zeal LLC in early 2000. He started investing in stocks when he was 12 years old, using money from summer jobs. He grew up fascinated by stock markets, dreaming of making a living in this unique realm where compensation is not limited by time on a task like most other professions.
After growing up in a small-town banking family in rural North Dakota, Adam left for school at the University of Colorado at Boulder. While watching the markets and trading, he studied finance, accounting, and entrepreneurship. Adam went on to be a Big Six CPA and consultant after graduation, never stopping learning.
By early 2000, Adam finally had enough experience and capital to found Zeal at 25 years old. Rather than hide his research and trading work in a hedge fund, Adam wanted to help others thrive in the markets. So he started sharing his now-world-famous market research work through very-affordable newsletters.
Customers raved, and many millions of dollars of newsletter sales later Adam was blessed to become a self-made millionaire. He is very thankful to be living his dream, and plans to research, trade, and share wisdom through newsletters for the rest of his life. Adam is a Christian saved by Jesus Christ. He and his wife are greatly blessed with 2 children, and they live in Colorado.