Gold’s Seasonality: Time to Get Positioned Ahead of Strongest Months
The comments above & below is an edited and abridged synopsis of an article by Tyler Durden
Despite recent weakness, gold is up 9% year-to-date and is poised for a strong second half of 2017.
Since 1975, March has been the worst month for gold, and April the second-worst. The months of June and July tend to be a quieter period, as investors shift their focus prior to strong later summer and fall months.
Over the past 41 years, September has been the best month for gold and the worst month for the S&P 500.
An experienced investor will build a position in commodities after periods of market weakness. As June closes, we see the end of seasonal weakness for gold, which will enter its historical prime time from August to October.
Since 1975, the second quarter of the year has been gold’s worst. This year has been no exception, with gold down about 1%. The third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.
Investors can use the clear seasonal patterns gold has exhibited over the past 40 years to make strategic purchases when the market is the weakest. Adding bullion to a portfolio in the next month or two is a smart move.
Gold is up 9% since the beginning of the year, rivaling the performance of the S&P 500 and making it one of the top-performing assets. The10-year Treasury yield is down 15%, and the S&P 500 has traded mostly sideways despite stronger-than-expected first-quarter earnings.
Each new, higher support level that gold tests and holds gives the market more resilience. It also serves to shake out those who panic and sell on weakness, only to buy back at higher prices.
If this pattern continues through the remainder of 2017, we’ll likely see gold prices well north of $1,300, potentially approaching $1,400, by mid-2018.
Armed with the knowledge that the lows of the year—along with the lowest bullion premiums—usually occur during the late spring to early summer months, an investor can take the contrarian approach and buy low right now.