Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Sell Gold in May and Go Away?

Commodities / Gold & Silver May 26, 2008 - 12:40 AM GMT

By: Roland_Watson

Commodities Best Financial Markets Analysis ArticleGold is currently moving in volatile times and to me at least the debate on where it is going next looks increasingly polarized. While the hot money seems to have abandoned gold and silver to ride the crude oil bandwagon (which will certainly suffer the same drop soon), the old maxim "Sell in May and go away" seems to have been pinned to gold's lapel.


The reason given is seasonal uncertainty but this May maxim is more associated with stock markets than gold and since the two markets are generally not correlated it seems strange to apply the saying to both asset classes. So how has the gold bull market done during the summer months? The last part of the saying ends with "and don't come back until Saint Leger's Day" which falls on the 2nd October.

Let us pull up the numbers between May 1st and October 2nd for the last 6 years.

Start Date Gold Price End Date Gold Price Difference Percentage
May 2002 $308 October 2002
$321
+$13
+4%
May 2003 $334 October 2003
$384
+$50
+15%
May 2004 $417 October 2004
$448
+$31
+8%
May 2005 $431 October 2005
$468
+$37
+8%
May 2006 $667 October 2006
$596
-$71
-10%
May 2007 $673 October 2007
$747
+$74
+10%

 

So in the last six May periods we have gold up in five years and down in one year. The average percentage gain computes as 5.8% which is not shoddy at all for a five month period and if we exclude our negative year, it comes out at an average of 9%. So much for sell in May and go away for gold.

Now gold was at $851 at the beginning of May 2008. Applying our average of 5.8% brings gold to $900 by October. Using the 9% brings it to $927. You may not think that is good enough but if you are parking your wealth to avoid problems in other assets it may serve you well relatively speaking.

Looking at the context of May to October 2008, what could trump this scenario? Could this be a negative summer for gold like 2006? Though gold may come out positive, caution is required. I mentioned crude oil at the top and "top" may be the operative word as the world's main commodity begins to finish forming a parabolic rise. There is only one way that parabolic rises end and that is with every one trying to hit the exit door with their profits at the same time - i.e. a sharp drop in prices.

Given gold's historic correlation with oil, I cannot see gold forging very far ahead if oil is going thru a correction similar to what we are seeing for gold and silver since mid-March. This summer may yet prove to be a period where single digits gains in gold are something to be appreciated

By Roland Watson
http://silveranalyst.blogspot.com

Further analysis of the SLI indicator and more can be obtained by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain the first issue of The Silver Analyst free and learn about subscription details. Comments and questions are also invited via email to silveranalysis@yahoo.co.uk .

Roland Watson Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in