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The Precious Metals Bears' Fear of Fridays

In the last issue of Seasonal Insights I have shown that the gold price behaves quite peculiarly in the course of the trading week. On average, prices rise almost exclusively on Friday. It is as though investors in this market were mired in deep sleep for most of the week.

Upon this I received a plethora of inquiries from readers regarding the corresponding moves in silver.

Thus I examine the behavior of the silver market on individual days of the week in this issue of Seasonal Insights.

The Pattern in Silver by Days of the Week

First let us explore the performance of silver by days of the week.

The black bar in the illustration below shows the annualized performance of silver in USD since 2000, the blue bars show its annualized performance on individual days of the week over the same time period.

I have measured the daily returns from one daily closing price to the next during COMEX trading hours; e.g. the Tuesday performance shows the average percentage change from the close on Monday to the close on Tuesday.

Silver, performance by days of the week, 2000 to 2017

In the silver market, Friday is an outstandingly strong day as well - it positively glitters.

Source: Seasonax

As you can see, Friday stands out quite positively in silver as well. It achieved an average annualized gain of 7.32%, which was even stronger than the corresponding 6.83% gain in gold!

In contrast to the gold market, the average moves in the remaining days of the week were greater as well, especially on Tuesdays, which generated an average decline of 4.69%.

In short, anomalies related to individual days of the week are quite pronounced in the silver market as well.

These patterns were measured over a span of 4,585 trading days, which suggests that they are not random occurrences.

The Days of the Week Under the Magnifying Glass

How exactly did these patterns evolve over time? The next chart shows the indexed returns on silver since the turn of the millennium in gray, and the cumulative returns achieved on specific days of the week in other colors.

Silver, cumulative performance by days of the week, 2000 – 2017

Overall, a steady uptrend was in evidence on Fridays.

Source: Seasonax

As the chart illustrates, the blue line that depicts the cumulative performance on Fridays has risen quite steadily over almost the entire 17 year span.

The remaining days of the week by contrast generated nothing but losses in quite a few years.

The main conclusion is that a potentially exploitable intra-week pattern exists in the silver market.

It is worth noting that the relative uniformity of the patterns in precious metals on individual days of the week is in stark contrast with their annual seasonality. As can be easily ascertained with Seasonax, the annual seasonal trend in gold differs significantly from that in silver.

Take Advantage of Statistical Anomalies in Gold and Silver!

As this study clearly shows: anomalous patterns in the performance of precious metals on individual days of the week are very pronounced. To see the corresponding anomalies in the gold market and the HUI Index, take a look at the last issue of Seasonal Insights. Traders, investors and dealers alike can take advantage of these patterns and quickly find statistical anomalies in other markets with the Seasonax app available on Bloomberg and Thomson-Reuters. While nothing is ever guaranteed in the markets, you can definitely let probabilities work in your favor.

 

By Dimitri Speck

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