Buy Gold and Silver in June, Sell in September

The best seasons to trade in precious metals.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The popular trading adage, “sell in May and go away”may hold true for some investors. But when it comes to commodities and precious metals, analysts at BMO Research are focusing on a new adage: buy in June and sell in September.

It may not be as catchy, but the guys behind BMO Research have found that the approach has appeared to work for most years over the past two decades for gold and silver metals and gold and silver equities represented on the Philadelphia Gold & Silver Index (XAU). The observation also appears to hold for key North American senior gold stocks that are included in the XAU like Barrick Gold Corp (TSX: ABX)(NYSE: ABX), Goldcorp Inc (TSX: G)(NYSE: GG), Kinross Gold Corp (TSX: K)(NYSE: KCG), and Newmont Mining Corp (NYSE: NEM).

Buying gold equities in June and selling in September made money four of in the past five years, eight of the past 10 years, and 12 of the past 20 years (based on the XAU Index).

The study suggests that commodities and mining equities go through seasonal low prices in May and June, and thus, selling those holdings is not advisable. Instead, the muted prices in June pose to be an opportunity to buy in anticipation of a rally in September.

July is typically the weakest month for gold and silver prices. This was found when BMO Research analyzed the daily price of the metals to the annual maximum and minimum prices by using 5-, 10-, and 20-year averages. Additionally, the average trading pattern shows a strong start to the year with a first quarter rally, followed by a weaker second quarter and finally, a metal price recovery in the third quarter.

Seasonal changes

As the seasons change, so do the prices of gold and silver. Gold sees a pick-up in demand usually during September and October due to the auspicious gold festive season celebrated in India. While fruitful Indian monsoon is often echoed in the demand of gold, this year there are other factors in play.

The relaxation of gold tariffs, duties, and regulatory restrictions on gold imports in India, due to the appointment of the Modi government, will likely impact the timing and depth of demand.

Silver, being a fraternal twin of gold, usually copies the movement of gold twice over, i.e., if gold rises 1%, silver will rise 2% and vice-a-versa.

Currently the price of silver is showing a greater volatility when compared to gold on monthly price changes.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Sandra Mergulhão has no positions in any of the stocks mentioned in this article.

More on Investing

A small flower grows out of a concrete crack.

3 Top Stocks You Can Still Buy for Under $20 a Share

Canopy Growth stock (TSX:WEED)(NASDAQ:CGC) and these two others are incredible investments to consider as we continue to move out of…

Read more »

Automated vehicles
Tech Stocks

Want to Be a Millionaire? This 1 Canadian Stock Could Soon See a Blistering Rally

If you can take the risk of buying falling shares of some companies with a solid growth outlook, they could…

Read more »

Oil pipes in an oil field
Energy Stocks

3 Top Stocks for Commodity Exposure

Top stocks like Teck Resources have been hit lately, but most commodity markets remain strong and ready for the next…

Read more »

Happy couple being attended by office worker at office
Dividend Stocks

BCE Stock: A Great Pick to Boost Your RRSP Retirement Fund

BCE (TSX:BCE)(NYSE:BCE) stock is a dirt-cheap telecom stock with a huge dividend yield to keep RRSP investors happy.

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

Want Easy Passive Income? These 2 Canadian Dividend Aristocrats Deliver

Passive income stars like Slate Grocery REIT (TSX:SGR.U) should be on your watch list.

Read more »

stock data
Stocks for Beginners

Are You Starting a Stock Portfolio? If Yes, Keep It Safe and Simple

First-time investors should keep their stock portfolios safe and simple by holding time-tested, income-producing assets.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Stocks for Beginners

New Investors: Follow the KISS Model With These 3 TSX Stocks

These TSX stocks keep it super simple for new investors. You'll need each of these services over the next decade…

Read more »

stock research, analyze data
Dividend Stocks

RRSP Investors: 1 Cheap TSX Dividend Stock to Buy Now and Own for 35 Years

RRSP investors can still find top TSX dividend stocks to buy at discounted prices.

Read more »