We may buy gold in response to what’s happening around us now but we always have an eye on the potential future. In other words, as proponents of “sound money,” we buy gold with the aim of holding on to it for the long run; we know that gold will always retain its intrinsic value, as it had for nearly 6,000 years.
But timing gold purchases can be tricky. To this end, we analyze gold fundamentally or technically. But there is another approach, one that “maps-out” the history of gold prices over time. This is called “seasonality” analysis.
Seasonality analysis is not a crystal ball. It’s a map of price history. It seeks to find patterns of consistency in the effects of price behavior.
So if we were to map price history for the month of December, what might it look like? How does price move on a weekly basis? Well, here it is.
Probability of Gold’s Weekly Price Movements in December from 1969 to 2016
Week 49 (2017): Dec 4 - 10
- Probability of gold rising is 38%
- Probability of gold falling is 62%
Week 50 (2017): Dec 11 - 17
- Probability of gold rising is 57%
- Probability of gold falling is 43%
Week 51 (2017): Dec 18 - 24
- Probability of gold rising is 68%
- Probability of gold falling is 32%
Week 52 (2017): Dec 25 - 31
- Probability of gold rising is 60%
- Probability of gold falling is 40%
History may not always repeat itself. But if history shows consistent patterns in buying and selling, it may indicate buying opportunities that can only be seen from a historical perspective.
In the case of December gold price movements, history has shown an upward arc, indicating buying opportunities in weeks 49 and 50.
While selling pressure decreases as buying activity increases.
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