My recent work has focused on seasonality of the gold
price (Mercenary Musings: October 19; October 26; November 23). Today, I present new research covering a 20-year time frame
from 1996-2015 that includes a 12-year bull market for gold from 2001-2012
bracketed by bear markets in the late 1990s and mid-2010s.
In a series of normalized charts, I will show that
regardless of overall year-over-year bull or bear market conditions, there
are predictable intra-year trends in the gold price.
The first series of charts shows the percentage change in
the daily gold price normalized to January 1 for each year from 1996 to 2015.
Please note that all gold prices are London afternoon close:
Based on data tabulated below, we define bull years for
gold (black) as those in which the price closed the year higher than
it opened and bear market years (red) as those in which the price
closed the year lower than it opened. In 1998, gold closed the year 40 cents
lower so the percentage change rounds off to zero:
Gold$ / Oz
Year
|
Jan Open
|
Dec Close
|
% Change
|
1996
|
394
|
369
|
6.3
|
1997
|
359
|
290
|
19.2
|
1998
|
288
|
288
|
0.0
|
1999
|
287
|
291
|
1.4
|
2000
|
282
|
274
|
2.8
|
2001
|
271
|
277
|
2.2
|
2002
|
278
|
347
|
24.8
|
2003
|
344
|
416
|
19.1
|
2004
|
416
|
436
|
4.8
|
2005
|
428
|
513
|
19.9
|
2006
|
530
|
632
|
19.2
|
2007
|
640
|
834
|
30.1
|
2008
|
847
|
870
|
2.6
|
2009
|
875
|
1088
|
24.3
|
2010
|
1122
|
1406
|
25.3
|
2011
|
1389
|
1531
|
10.2
|
2012
|
1598
|
1658
|
3.8
|
2013
|
1694
|
1205
|
28.9
|
2014
|
1225
|
1206
|
1.6
|
2015
|
1172
|
1061
|
9.4
|
The following three charts present composite seasonal
trends from June 1 to October 31 for the entire 20-year period, bear years
(1996-1998; 2000; 2013-2015) and bull years (1999; 2001-2012):
The 20-year composite chart expands upon the seasonal
trend documented in a previous missive(Mercenary
Musing, October 26
): an early June 1 high followed by lows
during the summer doldrums with a mid-August rally that continues through
mid-October. Separating bear and bull cases shows some interesting
divergence. In bull market years, the summer doldrums begin earlier and are less
pronounced and gold goes on the uptick by early August. In bear markets, the
August rally is short-lived to Labor Day and the October rise is choppy and
of less magnitude.
Next up is the second seasonal period from November 1 to
January 31 that we considered previously (Mercenary Musing November 23).
Here are the composite 20-year, bull market, and bear market charts:
For
the 20-year composite, the gold price trend is mostly up. Gold goes higher
thru late November as physical demand peaks, trades flat thru the holidays,
and rallies strongly for most of January.
If
we examine bull and bear cases independently, the patterns are once again
significantly different. In bull market years, the gold price mimics the
overall trend but the amplitudes are much higher (note y- axis scale change).
In
bear years, the gold price falls in November thru early January with a
notable price spike in early December. The seasonal rally does not begin
until end of the second week of the new year and though muted in amplitude,
remains intact for the remainder of the month.
Let's
review:
·Over
a 20-year time frame, there is an intra-year seasonality of the gold price
from June 1 to October 31 and November 1 to January 31.
·From
June 1 to October 31, gold reaches a seasonal low during the summer doldrums
and rallies after Labor Day and thru most of October.
·From
November 1 to January 31, gold rises in bull and falls in bear markets during
November and December, and rallies strongly in January in both cases.
·Although
there are notable differences in timing and amplitude of rises or falls in
the gold price during bull and bear market years, overall seasonal trends occur
no matter the prevailing market conditions.
Here's
a composite price chart that can be used to time buys and/or sells of gold:
In
conclusion:
·Speculators
and traders should buy paper gold and derivatives during the summer doldrums
and sell in late January of the following year.
·Hoarders
(like me) who accumulate gold as real money, a safe haven, and an insurance
policy against financial calamity, should buy physical gold during the summer
doldrums of any given year.
Ciao
for now,
Mickey
Fulp
Mercenary
Geologist
Acknowledgment:
Steve Sweeney is the research assistant for MercenaryGeologist.com and compiled the data and charts.
The Mercenary
Geologist Michael S. "Mickey" Fulp is a
Certified Professional Geologist
with a B.Sc. Earth Sciences with honor from the University of Tulsa, and
M.Sc. Geology from the University of New Mexico. Mickey has 35 years
experience as an exploration geologist and analyst searching for economic
deposits of base and precious metals, industrial minerals, uranium, coal, oil
and gas, and water in North and South America, Europe, and Asia.
Mickey
worked for junior explorers, major mining companies, private companies, and
investors as a consulting economic geologist for over 20 years, specializing
in geological mapping, property evaluation, and business development.In
addition to Mickey's professional credentials and experience, he is
high-altitude proficient, and is bilingual in English and Spanish. From 2003
to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and
British Columbia.
Mickey
is well-known and highly respected throughout the mining and exploration
community due to his ongoing work as an analyst, writer, and speaker.
Contact:
Contact@MercenaryGeologist.com
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