Seeking Alpha/Adam Hamilton/2-19-2022

“Gold-futures speculators’ most-feared hobgoblin is Fed-rate-hike cycles. These super-leveraged traders wielding outsized influence on gold prices flee in terror when rate hikes loom. The resulting heavy selling hammers gold sharply lower, damaging sentiment. But these myopic speculators apparently have no history books, as gold actually thrives during Fed-rate-hike cycles! They’ve proven very bullish for this asset.”

USAGOLD note: Hamilton states the thesis per the above, then lays out the proof in full detail. “Investors flock back to gold during Fed-rate-hike cycles,” he concludes, “because they are bearish for stock markets and threaten or trigger economic recessions. Gold is remembered and bought since it tends to power higher on balance as stock markets weaken. Gold’s upside potential in this next hiking cycle is way bigger than normal due to the raging inflation the Fed’s extreme money printing unleashed, driving bubble-valued stocks.”