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Even paying
July/August's top price for gold has averaged 5.1% returns by New Year's
since 1968...
It's a hardy
perennial for anyone studying the gold market. And with the British summer
being more like November this year, very hardy perennials are just what is
needed.
But will the gold price blossom on
schedule?
Greener than
George Monbiot's socks, we're happy to recycle this
fact yet again. The gold
price tends to display a seasonal pattern - rising in spring, slipping or
flat-lining in summer, only to rise once more in the fall and then winter.
No, the
pattern was shot in 2011 as we noted
last July. But such profitable "summer sales" have occurred
most frequently during longer-term bull phases, as we told the Financial
Times in 2009.
For Dollar investors, buying
gold even at the highest price in July or August has only failed
three times to deliver a gain by year's-end since this bull market began in
2001 (extending a pattern we noted in
2010. Lehman's collapse threw
2008 out of sync). Indeed, buying gold regardless of price in July or
August has paid off 20 times in the last 44 years all told - and delivered an
average 5.1% profit even with the losses included.
Now, this is
hardly the way to time a serious move into gold. Buying regardless of price?
Just because history says the summer average rewards it by year's end?
Viewed as
crisis insurance, however, gold comes at a cost - your premium being the
price you pay when you take out your policy. Sensible home economics says you
should look for best value. Only here, cutting your premiums needn't void
your insurance.
Sure, the gold price could well
go cheaper from here. But if it doesn't, and people scramble once more for
the security,
liquidity and diversification only a lump of rare yellow metal can bring,
then the current lull could be offering insurance at
summer sale prices.
And so far
this year, gold's summer sale is looking utterly typical.
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