Irrelevant Seasonality and Re-looks At Old Projects Getting Attention
Brien Lundin joins me today to address the seasonality argument for the metals and why it has not mattered this year. Seasonality is very much discredited by some investors and this year those people have been correct. We also discuss the companies that are getting attention in this tough market. The trend of re-looking at an old project and drilling some nice intercepts has been a successful strategy so far this year and Brien shares some of the companies that have generated nice returns.
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Cory – I’d also disagree on seasonality because we did have a Q1 Run, the was a sell off before PDAC in late Feb into early March so there was a PDAC curse, and then there was there a “Sell in May and go away” into the Summer Doldrums. Right on schedule.
In 2017 the exact same patterns played out. Q1 Run, PDAC curse, Summer Doldrums, rally from August into September.
Gold bottomed later than July into mid-August, and did bounce from 1167 to 1212, but has pulled back a bit in a slow market the last week or so. Lets see if Gold doesn’t just move higher in the balance of September and swim against the current.
Gold 40 year #Seasonality Chart from (1976-2015)
> Now look at 2017 and you’ll see a very similar pattern that played out with the rally out of Dec 2016 Tax Loss selling into the #Q1RUN in Jan/Feb, the #PDACCurse in Mar, the #SummerDoldrums with a low in July, and the August into September rally. Pretty clear #Seasonality.
> 2018 – Same pattern of rally from Dec 2017 tax loss into #Q1Run, March weakness (you’ll see that Gold did make a new low for the year at $1303.60 as the PDAC curse), followed by “Sell in May and go away” into low into the #SummerDoldrums…. Now in mid-August Gold looks to have bottomed and has started to bounce into September.
How anyone can look at an actual chart of 2017 or 2018 and not see how obvious the Seasonality has been is astonishing.
What is more likely are people looking for any reason to dismiss the Seasonality trends, because it irritates them that it keeps playing out so simply, and all their economic theories or chart gymnastics have been overly complicated and not as accurate.
I’ve successfully traded the last 2 years leaning most heavily on seasonality, and it has been very much on track. Buy in Dec tax-loss season, and ride up the Q1 run selling in late Feb, then buy the March dip and sell in late April to early May, then buy back in July/Aug and sell in late Sept/early October.
It really has been that simple. Hate to burst all the newsletter writers and chart subscription gurus bubbles.
Here are a few years during the last bull cycle where the #Gold #Seasonality rally from August into the month of September played out.
2001 – http://schrts.co/2zaecG
2002 – http://schrts.co/5Y6XW5
2003 – http://schrts.co/eXsG8E
2004 – http://schrts.co/67j7mQ
2005 – http://schrts.co/V6kUa5
2007 – http://schrts.co/FeVdjs
2008 – [Financial Crisis]
2009 – http://schrts.co/qEJxex
2010 – http://schrts.co/Duu8n9
2011 – http://schrts.co/wJRyWY
But yeah…… there’s nothing to Seasonality. Let’s just dismiss it…..
@Goldfinger – “Is it really that simple? Buy $gold miners in December and make big returns within 1-2 months?”
http://cdn.ceo.ca/1d48h46-GDX_December.png
(my short answer to him then was: YES)
The seasonality in Gold is from mid-August and into the month of September.
Gold did bottom in mid-August, and has bounced, but it’s been very muted due to the dollar strength. However, the month of September just got started, and many were out on holiday for the last week, so let’s just see how September does for the balance of the month.