As featured in the Commodity Trader’s Almanac 2013, [http://amzn.to/T2nCgU] in conjunction with our co-author John Person, [http://www.personsplanet.com/] there frequently is a strong price period for gold from mid to late August until late September or early October. Entering a long position on or about August 26 and holding until October 1 has been profitable in 23 of the last 38 years for a success rate of 60.5%. More impressive is this setup has worked in 13 of the last 16 years, an 81.3% success rate.
After peaking in August 2011 above $1900 per ounce, gold struggled until finally collapsing below $1500 per ounce earlier this year. Gold eventually found a bottom in late June/early July virtually matching its seasonal trend since 1975 (blue arrow). Gold has subsequently rallied and it is anyone’s best guess where it goes next. If it fails to rally in its seasonally favorable period mentioned above, it could be an early warning that gold’s decline may not have come to an end yet. Conversely, if gold does continue to rally it could signal that the metal could be in a new bull market.
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By Christopher Mistal