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The Holiday Season: A Nugget of Gold or a Lump of Coal?


 -- Published: Tuesday, 24 November 2015 | Print  | Disqus 

A Monday Morning Musing from Mickey the Mercenary Geologist

 

In two recent articles, I commented on the seasonality of the gold price and predicted short-term trends (Mercenary Musings: October 19 and October 26, 2015). Today, I examine the 12-year performance of gold during the pre-holiday to post-New Year time frame. The price charts are normalized to November 1 for each year and show the daily movement of gold on a percent change basis:

 

 

 

 

Here is a tabulation of the pertinent price data for November 1, December 15 and January 31 of the following year:

Gold  $ / Oz

 

Year

 November 1

     December 15

January 31

2003

383

408

400

2004

429

439

422

2005

460

506

569

2006

614

624

651

2007

830

791

923

2008

730

826

920

2009

1062

1122

1079

2010

1354

1389

1327

2011

1699

1574

1744

2012

1716

1696

1665

2013

1307

1235

1251

2014

1168

1209

1260

 

Items to note from the charts and table (anomalous years highlighted in red):

 

·         In 8 of 12 years, gold was higher on December 15 than on November 1.

 

·         In 7 of 12 years, gold was higher on January 31 than on December 15.

 

·         In 8 of 12 years, gold was higher on January 31 than on November 1.

 

I glean that the gold price most often goes up from November 1 to December 15 to January 31. However, the trends are not as compelling as my previous treatment that covered the five months from June 1 to October 31. This is especially true since the bear market for gold began in December 2011.

 

Supply-demand fundamentals influencing gold price during the three-month period include:

 

·         Jewelry demand that peaks during late November and early December when men buy their wives, girlfriends, and/or mistresses a gold bauble for the holidays.

 

·         International trade, debt, and year-end book squaring in late December that are settled in US dollars. This increased demand for greenbacks can cause the gold price to dip briefly.

 

·         Speculators move back into paper derivative markets in January and cause the gold price to rebound.

 

Finally, let’s take a look at the yellow metal’s recent performance:

 

Gold is down 9% since achieving a six-month high of $1184 on October 15. The fall in gold is inversely correlated with the rise in DXY, which has moved from the low 94 level to a recent eight-month high at 99.65:

The 12-year history indicates odds are 2:1 that gold will rally in the next 2+ months. But the above correlation chart shows what we really need to know: If the US$ remains at currently high levels, gold ain’t goin’ up anytime soon.

 

Note also that gold is down 8% year-to-date. If it closes 2015 below $1172 per ounce, this will be the third year of losses in a row. Folks, that last happened from 1996 to 1998.

 

Spurred by low prices, physical buying has recently come on strong from both central banks and the retail sector. Nevertheless, the four-year bear market for gold continues unabated.

 

And that presents buying opportunities for savers, i.e., those who neither speculate nor invest in gold.

 

The paper gold market has recently been a lump of coal for long traders trying to make a quick fiat dollar. But weak prices bring more nuggets of gold for those of us who hoard the most precious of precious metals as a safe haven against the machinations of the world’s central banksters.

 

Ciao for now,

 

Mickey Fulp

Mercenary Geologist

 

Acknowledgment: Gwen Preston is the editor and Steve Sweeney is the research assistant for MercenaryGeologist.com.

The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia.

Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specializing in geological mapping, property evaluation, and business development.  In addition to Mickey’s professional credentials and experience, he is high-altitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia. 

 

Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.

Contact: Contact@MercenaryGeologist.com

 

Disclaimer and Notice: I am not a certified financial analyst, broker, or professional qualified to offer investment advice. Nothing in any report, commentary, this website, interview, and other content constitutes or can be construed as investment advice or an offer or solicitation or advice to buy or sell stock or any asset or investment. All of my presentations should be considered an opinion and my opinions may be based upon information obtained from research of public documents and content available on the company’s website, regulatory filings, various stock exchange websites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. My opinions are based upon information believed to be accurate and reliable, but my opinions are not guaranteed or implied to be so. The opinions presented may not be complete or correct; all information is provided without any legal responsibility or obligation to provide future updates. I accept no responsibility and no liability, whatsoever, for any direct, indirect, special, punitive, or consequential damages or loss arising from the use of my opinions or information. The information contained in a report, commentary, this website, interview, and other content is subject to change without notice, may become outdated, and may not be updated. A report, commentary, this website, interview, and other content reflect my personal opinions and views and nothing more. All content of this website is subject to international copyright protection and no part or portion of this website, report, commentary, interview, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, MercenaryGeologist.com LLC.

Copyright © 2015 Mercenary Geologist.com, LLC. All Rights Reserved.


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 -- Published: Tuesday, 24 November 2015 | E-Mail  | Print  | Source: GoldSeek.com

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