GOLD : HISTORY SOLVES THE MISTERY (PART 3) / SEEKING ALPHA

Gold: History Solves The Mystery (Part 3)
             

Feb. 24, 2015 2:35 AM ET

 

by: Empower Investments

 

Summary

• This is a follow up to a previous article that discussed gold's seasonality and historical trends.
• Historically gold performs well in the first quarter of the year and this year is no different.
• In four of the past six years gold has rallied in the month of March and we believe that gold will rally in March of 2015.

Back in July 2009 I wrote an article suggesting that when it comes to gold, history can sometimes solve mysteries. A few months later, I followed that article with History Solves the Mystery (Part 2) wherein I discussed gold's tendency to rally in the first quarter and peak in the month of March. In fact, I called the month of March magical for gold traders and investors.

In my now ancient article from 2009 I wrote that "in 7 of the past 8 years, Gold has rallied in the 1st quarter. In 7 of 8 years, the 1st quarter high was made in the month of March including our previous all-time-high of $1,034 an ounce set back in March of 2008." Looking back at that article an all-time-high of $1,034 seems almost laughable, but is March still a magical month? I believe that it is and now, almost six years later, I want to tell you why.

First let's examine 2009. Sure enough the trend was up, but we hit the quarterly high in late February, not March. However, after some profit taking we saw gold rally again in March battling back to levels just shy of the February high. Was March magical? Indeed it was.


Chart from Kitco.com


But the trend didn't stop there. As you can see in the charts below, we saw first quarter rallies in four of the six years since the article with noticeable peaks in the month of March. 2010 and 2013 were clear exceptions with 2010 trending mostly sideways and a significant downward trend for most of 2013 which included the first quarter.








Is March still magical? The month of March may have lost a bit of its charm since my last article, but gold is still poised to shine. 2014 was back to business as usual with an uptrend in the first quarter and a quarterly high set in March. I believe that 2015 will be similar. We all know that past performance is not indicative of future results, but I think that as long as support holds around 1175, March 2015 will indeed be magical once again.