This chart of the GLD ETF, which is a client holding, goes back three years, the left half of the chart is actually gold itself as GLD did not start trading until November 18, 2004. The seasonal effect is captured here.In 4q 2003 gold went up roughly 13%, 2004 it went up 8.5% although it peaked with an 11.4% gain on December 3 of that year, and in 2005 it had 10.4% gain but peaked with a 13.68% gain on December 12.
Obviously there is no way to know with a certainty that history will repeat but if you are listening to people that say it will go down you may want to explore this seasonal factor a little more.
I am not really in the $1000 gold camp. In the past I have written $750-$800 as a ceiling but that seems a little high for now.
For what it is worth gold has been in a range of sorts that seems to be holding today right at the 200 day moving average. I think a $550 floor and a $700 ceiling, assuming no external shocks, may hold. If this notion holds any water, a price below $60 for the ETF for a long term hold thought of as a tool for diversification may be a good entry point for people that have no exposure.
2 comments:
If believe that it bounced off near-term support of $585.
According to a trader of 30 years: "3. Gold has the most seasonal trend of the precious metals and will generally bottom in the summer and move higher into late winter. The gold market can also be influenced by currency valuations, which may somewhat void the seasonal trend. Silver tends to follow the same seasonal pattern as gold."
I think we are about to witness a bear move of large proportions in the commodities. As today's action shows, there's a lot of momentum in the move to the downside in all of the commodities. Just look at the CRB. The long-term trendline has been broken.
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