Gold Is Seasonal: When Is the Best Month to Buy?

Louis James, Chief Metals & Mining Investment Strategist

Dear Reader,

I’m just back from this year’s PDAC conference in Toronto, the biggest conference in the mineral exploration industry. The short version of what I found was that while smaller than last year’s conference, there was a great deal of positive energy present, driven, I’m sure, by the resurgence of the resource sector thus far this year.

The key takeaway is that this was a deal-making event. Companies that have made discoveries but are low on cash were out in force, looking for alternatives to keep going. I expect to see a great deal more mergers and acquisitions activity going forward, in some cases bringing possibilities for us to profit.

Meanwhile, Jeff Clark covers a more pressing opportunity, especially for those new to investing in gold.

More soon,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats
Last
One Month Ago
One Year Ago
Gold 1,339.47 1,262.90 1,575.10
Silver 20.86 19.94 28.81
Copper 3.09 3.23 3.52
Oil 102.58 99.88 91.56
Gold Producers (GDX) 26.18 23.91 36.91
Gold Junior Stocks (GDXJ) 42.50 38.35 63.84
Silver Stocks (SIL) 14.00 12.71 18.05
TSX (Toronto Stock Exchange) 14.299.10 13,786.50 12,826.52
TSX Venture 1,043.01 962.10 1,116.23

Gold Is Seasonal: When Is the Best Month to Buy?

Jeff Clark, Senior Precious Metals Analyst

Many investors, especially those new to precious metals, don't know that gold is seasonal. For a variety of reasons, notably including the wedding season in India, the price of gold fluctuates in fairly consistent ways over the course of the year.

This pattern is borne out by decades of data, and hence has obvious implications for gold investors.

Can you guess which is the best month for buying gold?

When I first entertained this question, I guessed June, thinking it would be a summer month when the price would be at its weakest. Finding I was wrong, I immediately guessed July. Wrong again, I was sure it would be August. Nope.

Cutting to the chase, here are gold’s average monthly gain and loss figures, based on almost 40 years of data:

Since 1975—the first year gold ownership in the US was made legal again—March has been, on average, the worst-performing month for gold.

This, of course, makes March the best month for buying gold.

But: averages across such long time frames can mask all sorts of variations in the overall pattern. For instance, the price of gold behaves differently in bull markets, bear markets, flat markets… and manias.

So I took a look at the monthly averages during each of those market conditions. Here’s what I found.

Key point:

The only month gold has been down in every market condition is March.

Combined with the fact that gold soared 10.2% the first two months of this year, the odds favor a pullback this month.

And as above, that can be a very good thing. Here’s what buying in March has meant to past investors. We measured how well gold performed by December in each period if you bought during the weak month of March.

Only the bear market from 1981 to 2000 provided a negligible (but still positive) return by year’s end for investors who bought in March. All other periods put gold holders nicely in the black by New Year’s Eve.

If you’re currently bullish on precious metals, you might want to consider what the data say gold bought this month will be worth by year’s end.

Regardless of whether gold follows the monthly trend in March, the point is to buy during the next downdraft, whenever it occurs, for maximum profit. And keep your eye on the big picture: gold’s fundamentals signal the price has a long climb yet ahead.

Everyone should own gold bullion as a hedge against inflation and other economic maladjustments… and gold stocks for speculation and leveraged gains.

The greatest gains, of course, come from the most volatile stocks on earth, the junior mining sector. Following our recent Upturn Millionaires video event with eight top resource experts and investment pros, my colleague Louis James released his 10-Bagger List for 2014—a timely special report on the nine stocks most likely to gain 1,000% or more this year. Click here to find out more.



Gold and Silver HEADLINES

US Mint Sales Plummeted 60% in February (Mining.com)

Sales of American Eagle gold and silver bullion coins dropped 60% in February, shows US Mint data. Only 31,000 ounces were sold in February, compared to 80,500 ounces in the same month last year. In January the Mint recorded 91,500 coin sales, down 40% from 150,000 ounces sold in January a year earlier.

A pattern has emerged with retail investors, where purchases decline when gold rises—and gold is up 11% in 2014. As Jeff shows in the article above, we may yet see a dip this month, due to both seasonality and a likely cooling off after the run up.

US Mint to Sell Platinum Coins Again on Dealer Demand (Mining Weekly)

The US Mint will resume American Eagle platinum bullion coin offerings this month after a four-year absence. The Mint stopped selling platinum coins in 2008.

The platinum price hit nearly $2,300/oz in March of that year but plummeted to $730 by October, as the financial crisis sapped demand for the metal primarily used in catalytic converters.

Platinum prices have strengthened on improving US and Asian auto demand, as well as supply fears caused by mine violence and crippling strikes in top producer South Africa. Platinum is up about 8% so far this year, compared to gold’s rise of 11% and silver’s 9%. We remain bullish on all precious metals.

India’s Trade Minister Wants Gold Import Curbs Eased (Mineweb)

India’s trade minister has raised the issue with the finance ministry of easing some curbs on gold imports. The senior officer admits that imposed restriction measures encourage smuggling and hurt the gem and jewelry industry.

When the Indian government imposed high tariffs and other curbs on gold imports to improve the country’s budget deficit, we knew there would be unintended consequences. Authorities managed to reduce gold imports dramatically since last August—but caused other problems.

One of those problems was smuggling. According to the World Gold Council, up to 200 tonnes (6.4 million oz, or Moz) was believed to have been smuggled into the country in 2013.

Another problem was the lack of available supply for the jewelry and gem industry. “We have to ensure adequate availability of gold for the gems and jewelry industry, which is a very important sector for our exports,” said Trade Minister Anand Sharma.

If India does ease gold restrictions, demand in the country will grow and provide additional support for the price.


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