• 17 hours Tech Billionaire Takes Aim At Google
  • 19 hours Chinese Police Bust Largest Ever Illicit Crypto Mining Operation
  • 22 hours Expect A Pullback Before Gold's Next Major Rally
  • 1 day Why Interest On Gold Matters
  • 2 days Ten Extravagant Food Items For The Wealthy Only
  • 2 days Why Saudi Arabia Won't Give Up On The Aramco IPO
  • 3 days $32 Million Crypto Heist Halts Tokyo Exchange
  • 3 days Is A Gold Selloff Looming?
  • 4 days Central Banks Are Stashing Gold And Dumping Treasuries
  • 4 days Three Cannabis Trends Flying Under Investors’ Radars
  • 5 days $1.3 Billion In Cocaine Found On JPMorgan Vessel
  • 5 days Amazon Teams Up With Lady Gaga To Win Over Generation Z
  • 5 days Dollar Falls As Powell Teases Rate Cuts
  • 5 days Will The World's First Trillion Dollar Company Ever Bounce Back?
  • 6 days Many Americans Will Never Stop Working
  • 6 days Mozilla vs DarkMatter: The Cyber Espionage End Game
  • 6 days Chile Cracks Down On Environmental Infractions
  • 6 days Warning Signs Emerge For Boeing
  • 7 days First Amendment Stands Strong In Trump vs. Twitter Showdown
  • 7 days Musk Bullish On Tesla Despite Executive Exodus
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

  1. Home
  2. Markets
  3. Other

Take Advantage of the Different Seasonal Trends of Precious Metals!

Prices in financial and commodity markets are exhibiting seasonal trends. This applies to the precious metals gold, silver, platinum and palladium as well.

The chart below depicts the seasonal trends of the gold price over a time period of 45 years.


Gold price in USD, seasonal trend over 45 years

Seasonal Gold Prices
The price of gold typically rises from early August until the end of February
Source: Seasonax

Gold prices typically experience a seasonal rally in the second half of the year, with the advance beginning in early August and extending into late February of the following year. The positive seasonal trend in gold prices is highlighted in dark blue.


The gold price has increased until the end of February in 29 out of 45 cases

Gold prices have risen in 29 out of 45 cases during the seasonally strong period. In the 29 rally years, the average gain over this time period amounted to 17.85%, while the average loss in the 16 years exhibiting declines amounted to 8.17%. An especially large gain of 133,25% was recorded in 1979. The largest loss occurred in 1976, but amounted a much smaller 20.36%.

The bar chart below shows the gains and losses gold has posted during the seasonally strong time period in every year since 1971 (green bars represent gains, red bars losses):


Gold in USD, return in percentage points between August 7 and February 21 for every year since 1971

Gold in USD, return in percentage points between August 7 and February 21 for every year since 1971
Gains (green bars) significantly exceed losses (red bars).
Source: Seasonax

Evidently, gains in gold prices are both more frequent and larger than losses during the seasonally strong period. However, between 1980 and the late 1990s, no large returns were generated during this time period, as gold was mired in a large-scale bear market.


Festivities are driving the gold price

The main reason for the positive seasonal gold price performance between early August to late February are various festivities, including Christmas, the Chinese new year celebrations and the Indian wedding season. Gold is frequently given as a gift on these occasions. Jewelry makers and merchants tend to stock up on gold prior to the festivities, and tend to push up gold prices in the process. Around two thirds of annual mine production are used by the jewelry trade.


Silver: shooting star at the beginning of the year

Silver's industrial metal characteristics are far more pronounced than those of gold. The next chart illustrates the seasonal trend of the silver price.


Silver price in USD, seasonal trend over 45 years

Silver Seasonals
Silver tends to exhibit a rapid seasonal rally at the beginning of the year
Source: Seasonax

As you can see, the seasonal price trend of silver is completely different from that of gold. Silver typically rises rapidly at the beginning of the year. It has done so in 30 out of the past 46 years. Gains of up to 47.35% were posted - in a mere 26 trading days from the beginning of the year until February 19.


Industrial metals are subject to seasonal trends of their own

Interestingly, platinum and palladium prices are also recording strong seasonal gains at the beginning of the year - instead of from August onward like gold. In other words, industrial demand is the dominant driver of their seasonal price trends. Very likely many industrial users tend to place their buy orders early in the new financial year.

While such calendar-driven business practices appear detrimental if one wants to obtain the best possible prices, annual planning and ordering procedures are often aligned with the financial year. Purchasers of precious metals may not be aware of the seasonal price trends, may be ignoring them because their in-house procedures are taking precedence.


Take advantage of the seasonal trends in precious metals!

As an investor or trader you can take advantage of the seasonal trends in precious metals in order to improve the timing of your purchases and sales and to manage the appropriate level of investment. Over time, this should result in obtaining more favorable prices. Keep in mind that seasonal price trends are averages and deviations are possible in some years. Nevertheless, seasonal trends can benefit you by making probability work in your favor.

 

Back to homepage

Leave a comment

Leave a comment