• 511 days Will The ECB Continue To Hike Rates?
  • 511 days Forbes: Aramco Remains Largest Company In The Middle East
  • 513 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 913 days Could Crypto Overtake Traditional Investment?
  • 917 days Americans Still Quitting Jobs At Record Pace
  • 919 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 922 days Is The Dollar Too Strong?
  • 923 days Big Tech Disappoints Investors on Earnings Calls
  • 924 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 925 days China Is Quietly Trying To Distance Itself From Russia
  • 926 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 930 days Crypto Investors Won Big In 2021
  • 930 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 931 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 933 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 933 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 937 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 937 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 938 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 940 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Remember, Remember, Gold in September

Gold Bar

In American poet W. S. Merwin's poem "To the Light of September," the speaker calls the ninth month "still summer," yet with a "glint of bronze in the chill mornings."

I agree--to an extent. Here in San Antonio, Texas, home of U.S. Global Investors, we're most definitely still in the summer season. But in the investing world, when we talk about September, there's a glint not of bronze but another precious metal: gold.

That's because September is historically gold's best-performing month of the year, returning 2.16 percent on average since 1969.

September is Historically the Best Month for Gold

I invite you to compare the chart above, updated to reflect the most recent monthly returns, to the one published this time last year.

September is Gold Month


Drivers of Gold

There are several seasonal factors that explain why gold glitters a little more brightly in September. The most notable reason is what I call the Love Trade. In India, this month marks some of the most spirited gold-buying in anticipation of Diwali, which falls on October 23 this year. Following closely behind is the Indian wedding season, when gold is purchased for the bridal trousseau and as gifts in jewelry form. And September is normally when retailers restock their wares ahead of Christmas and after the Islamic month of Ramadan, at the end of which gold jewelry is commonly exchanged.

Another explanation might also be the inverse relationship between bullion and stocks, which only becomes more apparent in September. Earlier this week I discussed how September is historically the worst month of the year to trade stocks in. It's very possible that many investors turn to gold in September, knowing that the month's stock returns are typically poor.

Inverse Relationship Between Gold bullion and Stocks is Most Dramatic in September

The yellow metal had a tough 2013--its worst since 1981, in fact--and in September its price fell 5 percent, from $1,396 an ounce to $1,327. Although a movement such as this is generally normal for gold, a loss in the ninth month is somewhat rare. In the last 20 years, there have been only five Septembers in which gold prices ended lower than they started at: 1996, 2000, 2006, 2011 and 2013. That's once every three and a half years on average.

We're only a few days into the month, and so far spot prices have dropped about 1.6 percent. But this is completely in line with gold's normal behavior. As I pointed out in the second part of "Managing Expectations," it has a daily standard deviation of ±1 percent.

 


Be sure to check out our Gold and Precious Metals Fund (USERX), recognized by Morningstar with a four-star rating*. Also, to find out which countries contribute the most gold annually, explore our updated interactive "Global Gold Mining Production" map.

 

Back to homepage

Leave a comment

Leave a comment