Gold News

"Buy Gold Now" Says the September Average

Fancy playing gold's historical odds this fall...?
 
WE DON'T make price forecasts here at BullionVault, writes Adrian Ash, head of research at the world's leading gold and silver exchange online.
 
If we knew where prices were heading by a certain date, we'd be in another business entirely...ruling the world most likely from a black basalt tower shrouded in thunder and lightning.
 
Or at least cleaning the office with an army of enchanted mops.
 
History can help point the way however. And as lots of coin-dealers and pundits will tell you today, the month of September historically sees the best average gain in gold prices.
 
"Gold has its best month of the year in September," as UK bank and London market-maker Barclays put it in a note today, "as investors shy away from riskier assets such as equities."
 
Whatever the reason (India's Diwali demand? the end of gold's typical summer lull as Western traders return from the beach?) the simple averages bear this out. Since prices began floating in 1968, buying gold has returned 2.3% in September (US Dollar prices) on average, gross of costs. That's well ahead of the average 0.7% from the other months of the year.
 
More than that, according to BullionVault's own number-crunching today, September has been the best single month in 9 of the last 46 years. That beats March, May and July (5 each) as well as February (six).
 
But most important for active investors, perhaps, is looking beyond one month's date. Because the last third of the year...from September to New Year's Eve...has offered the best time to buy and then sell gold since 1968.
 
The last four months of the year, which 2014 will enter on Monday, has returned an average 5.1% to Dollar-gold traders. That beats the earlier two thirds both on the average return (Jan-April 3.1%, and May-Aug 2.5%) and also on frequency (best gain 17 times versus 14 and 15).
 
These are just historical gold data, remember. There's no guarantee 2014 will play out like the "average" year. But if you fancy playing the odds, take note. Gold currently stands 7.3% higher in Dollar terms so far in 2014. It has matched or beaten that year-to-date gain 19 times since 1968.
 
In those 19 years, gold only fell to end the year lower 4 times. And where gold ended August within 1 percentage point of its current year-to-date rise (6 times in total), it only fell once by New Year. 
 
The average rise by year-end has been 8.9%.
 
These are just numbers, of course. And if you see active trading like playing roulette, then the wheel...like a pair of dice...has no memory. Choosing to buy gold because the historical averages suggest it, however, may just become self-fulfilling.
 
Imagine if everyone reading coin-dealer blogs, pundit columns and Barclays' note today decided to act.

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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