Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

3 Reasons Why “Spring Forward, Fall Back” Also Applies To Gold

Commodities / Gold and Silver 2017 Apr 25, 2017 - 02:57 PM GMT

By: HAA

Commodities

Stephen McBride : Year to date, the price of gold is up 12%. This is not unusual: the yellow metal also had a strong start into 2016, rising 18% over the same period.

So is there a seasonal pattern to the gold price? To answer that question, we dissected gold’s performance dating back to 1975 and identified some trends investors can use to their advantage.


1. March/April Are Gold’s Worst Months… And The Best Time To Buy


Source: LBMA

Since 1975, March has been the worst month for gold, followed by April as the second-worst.

In contrast, September has been the best month for gold over the past 41 years. Coincidentally (or not), September is also the worst month for the S&P 500.

As the chart shows, three-quarters of gold’s top-performing months are in the latter half of the year.

Based on this, an inexperienced investor might conclude that you should sell before the bad months (March, April) and buy prior to the good months (August to October). However, as Rick Rule, CEO of Sprott Global Resource Investments, says, “You’re either a contrarian, or you will become a victim.”

So the gold price is usually at its lowest point in March and April, which makes these two months the best time to buy.

In contrast, when gold has been rising steadily through the year into October, that may be a good time to sell.

Given gold’s attribute as a long-term store of value, we don’t recommend trying to trade it. However, when you want to liquidate some of your holdings, following seasonal patterns can prove very lucrative, as the next chart demonstrates.

2. Buy The Spring, Sell The Fall


Source: LBMA

If you had simply bought gold on April Fool’s day and sold it on Halloween every year since 1975, you would have made an average return of 4.6%.

Not a bad return on your money for two days’ worth of work and seven months of tying up your money.

We think you should hold your gold for a lot longer than seven months. Nonetheless, this four-decade-long pattern suggests that the gold price will repeat its pattern again this year.

The next chart amplifies this point.

3. The Only Quarter In Town


Source: LBMA

Since 1975, the second quarter of the year has been by far gold’s worst… with returns dead flat over the 41-year period. On the flip side, the third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.

Given the clear seasonal patterns the gold price has exhibited over the past four decades, how can investors take advantage of it in 2017?

Add Gold to Your Portfolio Now

Based on gold’s seasonal patterns, adding bullion to your portfolio sometime in the next few weeks could prove a profitable endeavor.

As stated above, gold is up 12% since the beginning of the year. This makes it one of the top-performing assets—alongside silver, which is up almost 20% year to date.

In comparison, since making multi-year highs in March, the 10-year Treasury yield (which moves inversely to its price) is down 15%. Also, after roaring higher post-election, the S&P 500 has moved sideways since late January.

Considering gold’s recent rise, many investors are waiting for a pullback. But armed with the knowledge that the lows usually occur in the spring, you can take the contrarian approach and “buy low” right now.

Given that the reflation trade is all but dead in the water, you may be able to “sell high” in the not-too-distant future.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

© 2017 Copyright Hard Assets Alliance - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 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