Buy Gold and Silver in June, Sell in September

The best seasons to trade in precious metals.

| More on:
The Motley Fool

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


CNR Stock: Should You Buy Today?

Canadian National Railway has been hit in recent quarters, as economic growth has slowed, with CNR stock declining 10% in…

Read more »

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Boosting Your Monthly Income: TSX Stocks That Deliver

Dividend investing can boost regular or active incomes, especially select TSX stocks that pay monthly dividends.

Read more »

consider the options
Tech Stocks

Better Buy (2024 Edition): Shopify or Nvidia Stock?

Shopify (TSX:SHOP) isn't the only red-hot tech stock in town that could add to recent gains.

Read more »

Bad apple with good apples

5 Stocks You Can Confidently Invest $500 in Right Now

These stocks could significantly grow your investment over the next decade.

Read more »

Illustration of bull and bear
Tech Stocks

A Bull Market Is Coming: 3 Growth Stocks That Could Thrive

Given their high growth prospects and cheaper valuation, these three growth stocks would be an excellent buy as the market…

Read more »

Golden crown on a red velvet background
Energy Stocks

Enbridge Stock: This Dividend Aristocrat Could Gain in 2024

Enbridge (TSX:ENB) stock is looking like a great buy as management expects it to grow in 2024.

Read more »