Gold and Gold Stocks – Patterns, Cycles and Insider Activity, Part 2

Cycles and Sentiment
Another recurring pattern consists of the seasonally strong period in gold around the turn of the year, which is bisected by a mid to late December interim low in the gold price. An additional boost can be expected in January and Feburary from the strong seasonal uptrend in silver and platinum group metals as well (to see the seasonal PGM charts, scroll down to our addendum to this recent article by Dimitri Speck).
Rallies in silver tend to be quite supportive for precious metals stock indexes, as silver stocks have an even higher beta than their gold brethren (note in this context that the XAU is the more broad-based of the two indexes these days and contains far more silver stocks than the HUI – see these lists of the current XAU and HUI constituents for details).
Below is the 20-year seasonal gold chart, with the period from the December 20 interim low to the late February peak highlighted. Note that the statistical data shown on the chart refer specifically to the highlighted period, which in turn is an average of the action at this time of the year over the past 20 years.
Obviously, there are years in which no gain is achieved in the seasonally strong period, but over the past 20 years the probability that prices would rally was 70% (14:6 = 7:3). Moreover, while the gains in profitable years ranged from +8.52 to +17.98%, losses were much smaller, confined to a range of just -1.60 to -3.30%.

This post was published at Acting-Man on December 28, 2017.

The Bitcoin Effect

Merry Christmas to our American friends. Happy Christmas to the rest of the Anglosphere. Felicem natalem Christi to our Latin-speaking audience, and gr jl to those who are reviving Old Norse as a great language!
Let’s address two themes about the gold price trend that are increasingly in popularity the past few months – as the price of gold has been falling. Blame bitcoin. And blame rising interest rates.
There is no direct mechanism – no arbitrage – that pushes up bitcoin and down gold. As there is, for example, with changes in relative palladium or platinum demand if diesel engines gain or lose market share from gasoline engines.
Nor do we give truck to the idea that the dollar has been pushed from 1.00 to 0.000053 (we don’t think even the bitcoin bugs who say it, really believe it). What are you going to believe: a B. S. theory, or your own lying eyes?
There is arguably an indirect bitcoin-gold price connection mechanism. Those who own gold for the price appreciation may be attracted to bitcoin. While gold does not seem to be going up, bitcoin obviously is. If someone wants to make dollars quick, bitcoin sure seems to be a better vehicle to ride than gold.

This post was published at GoldSeek on Tuesday, 26 December 2017.

Palladium – The Metal for the Discerning Speculator, or The Simple Way of Doubling Profits in Palladium

Misbehaving Metals
In past issues of Seasonal Insights I have discussed the very odd behavior of a variety of instruments in the course of the typical week: in issue 17 the topic were intra-week moves in S&P 500 Index, and in issue 18 the no less interesting intra-week pattern in Bitcoin.
In issue 22 I moved on to the ‘Strange Behavior of Gold Investors from Monday to Thursday’, which was followed by an examination of the associated pattern in silver a week later.
Several readers asked me whether a similar pattern could be observed in platinum and palladium as well. Is the action in these metals on Friday standing out, as it does in gold and silver?
Let us take a closer look. O

This post was published at Acting-Man on December 21, 2017.