Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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.


© 2005-2022 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