Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17
These Two Articles Debunk The Biggest Financial Nonsense I See In The Media - 18th Sep 17
Bitcoin Price Crash 40% In 3 Days Underlining Gold’s Safe Haven Credentials - 18th Sep 17
The Sum of Risks – Global, Strategic, Political, and Financial - 18th Sep 17
The Netflix Of Canada’s Cannabis Boom - 18th Sep 17
Stock Market Sentiment Speaks: Either You Learn From The Events Of The Past Week, Or You Are Hopeless - 18th Sep 17
SPX 2500 … At Last! - 18th Sep 17
Inflation Lies, Lies and OMG More Lies - 18th Sep 17
How to Choose right Forex Trader? - 18th Sep 17
Who Has Shaped the World the Most? The Dozen Greatest Achievers - 17th Sep 17
Riding the ‘Slide’: Is This What the Next Stocks Bear Market Looks Like? - 17th Sep 17
Gold Up, Markets Fatigued As War Talk Boils Over - 17th Sep 17
Predicting the Future of the U.S. and the World - 16th Sep 17
Deceit in the Financial Food Chain - 16th Sep 17
Gold GLD ETF Investment Resuming - 16th Sep 17
Extreme Weather & Energy Markets: What's Next? - Video - 15th Sep 17
Trump’s Path to IP Wars - 15th Sep 17
GBP USD Approaches Fibonacci Target - 15th Sep 17
Higher US Interest Rates May Force Higher Inflation Rates - 15th Sep 17
Stock Market Investors: Taking the Road "Less Traveled" Has Its Perks - 15th Sep 17
The 3 Best P2P Lending Platforms For Investors In 2017—Detailed Analysis - 15th Sep 17
The US Debt Bubble Will Soon Warrant Serious Measures - 15th Sep 17
Why it is Often Difficult to Sell a House Fast - 15th Sep 17
S&P 500 At New Record High, Will It Break Above 2,500? - 14th Sep 17
Capital Market Trends - 14th Sep 17
Mike Maloney: The Top 10 Reasons I Own Gold and Silver - 14th Sep 17
The Only Real Europe is Greece - 14th Sep 17
7 Security Tips for Online Traders - 14th Sep 17
5 Markets Ready to Move Before Year-End. Eexpert Analysis and New Trading Opportunities - 13th Sep 17
Massive Equifax Hack Shows Cyber Risk to Deposits and Investments Today - 13th Sep 17
Investment Advice for My Children & Grandchildren - 13th Sep 17
TRADE FOR A CHANGE - 13th Sep 17
The Stock Performance of Public Casino Companies in 2017 - 13th Sep 17
Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - 13th Sep 17
Precious Metals Bull Analogs Update - 13th Sep 17
Tip: When “This” Happens, A Stock Price Goes Up… - 13th Sep 17

Market Oracle FREE Newsletter

5 Markets Ready to Move Before Year-End. Eexpert Analysis and New Trading Opportunities

Gold Seasonal - The Golden Age Has Just Begun

Commodities / Gold and Silver 2017 Jul 07, 2017 - 05:35 PM GMT

By: Dimitri_Speck

Commodities

In recent issues of Seasonal Insights I have discussed two asset classes that tend to suffer performance problems in most years until the autumn, namely stocks and bitcoin.

I thought you might for a change want to hear of an asset that will be in a seasonal uptrend over coming months.

Such assets do of course exist, and one that has particularly good prospects at the moment is gold.


You may well have already heard that gold prices typically exhibit strength in the second half of the year.

But when exactly does gold begin to rally, and how long does its strength last?

A close Look at the Seasonal Trend in Gold

Take a look at the seasonal chart of gold below. Contrary to standard charts, seasonal charts illustrate the average performance of an asset price in the course of a year. In this case the prices of the past 20 years were averaged. The horizontal axis depicts the time of the year, while the vertical axis shows the average price performance.

Gold price in USD per ounce, seasonal trend over the past 20 years

Gold begins to rise in early July
Source: Seasonax

The seasonally strong period is highlighted in dark blue on the chart. It begins on July 6 and ends on February 24 of the following year.

The average gain of the gold price in the seasonally positive time period amounted to 8.62 percent, or 13.90 percent annualized.

In the rest of the year the gold price on average tended to generate a loss.

In short, the strong seasonal period is beginning right now!

Think About Christmas in Midsummer

Even though you are probably not thinking about Christmas in the sweltering heat of the summer months: the festive season is the reason why the seasonal rally in gold tends to begin now.

Gold is after all not only an investment asset and an industrial metal. An estimated two thirds of annual gold production is used in jewelry fabrication. Gold demand for jewelry making thus has a noticeable effect on prices.

There are numerous international festivities that begin to affect gold prices already now.

These include Christmas, the Chinese New Year and the Indian wedding season in the autumn. On occasion of these festivities, gold is often given as a gift.

Since jewelry makers naturally replenish their inventories several months ahead of these revelries, the seasonal rally in the gold price begins already in early July.

The Gold Price Rose in 15 of 20 Cases!

The seasonally strong time period between July 6 and February 14 resulted in a positive return for the gold price in 15 of 20 cases.

In the 15 years in which a profit was generated, the average gain in this time period amounted to 14.33 percent, while the average loss in the 5 losing years was 6.86 percent.

The bar chart below shows the gold price return in the strong seasonal phase for every year since 1997. Green bars indicate gains, red bars indicate losses.

Gold in USD, percentage return between July 6 and February 24, in every year since 1997

Winning years are dominant
Source: Seasonax

A particularly large gain of 43.56 percent was recorded in 2007. The largest loss was significantly smaller. It occurred in 2014 and amounted to 9.10 percent. 

The upcoming strong seasonal period therefore not only tended to generate an above average number of large gains, but fewer and far less pronounced declines.

What is the Score with Silver?

You may not be aware of the fact that although the prices of gold and silver usually exhibit a strong positive correlation, the seasonal pattern of silver displays significant differences. That is due to the fact that silver has a much larger industrial demand component. Its seasonal trend therefore differs from that of gold, and incidentally, it looks actually quite similar to that of platinum and palladium.

In order to take a look at the seasonal trends of the other precious metals, visit www.seasonalcharts.com, or call up Seasonax on your Bloomberg Professional Terminal by typing in “APPS SEASON”, or access it through the App Studio in the menu of Thomson-Reuters Eikon.

Take advantage of the seasonal trends in precious metals!

Dimitri Speck,

Seasonax.com

Dimitri Speck is the founder of Seasonax and author of The Gold Cartel, published by Palgrave Macmillan.

© 2017 Copyright Dimitri Speck - 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.


© 2005-2017 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

Catching a Falling Financial Knife