When to Invest in Gold

New research from The Real Asset Company finds that Q1 is the best time to watch the gold price make gains from month to month, which suggests the end of December or right at the beginning of the year are the times to get on the gold investment band-wagon.

Not “if” but “when” to invest in gold

According to World Gold Council data, it is estimated that in the UK alone 600,000 people will be looking to invest in gold, for the first time, over the next 12 months. So we thought we would try and give some helpful advice as to what to look out for in gold price action in 2013, based on the last 12 years.

We looked at the gold price action since 2000 and how it changed from month to month, hoping it would give us some indication as to when is best to invest in gold. We looked at the percentage change in the month end gold price, month to month, across three major currencies – the US dollar, the British pound and the euro.

We can see that there are some clear months when the gold price, on average, appears to perform weaker than other months.

 

From the graph above we see that across all currencies December, or the beginning of January, is most likely to be the best month to buy gold bullion, regardless of which of these currencies are chosen. On average the month-end gold price decreases by 0.4% compared to November, but increases by 2.5% and 2.1% in January and February respectively.

Months when we see the worst price performance are July and October, the only two months where there are simultaneous decreases in the gold price at month end across all currencies.

It is unsurprising that October is a bad month for gold (but a good month for gold investors); gold’s track record for the Halloween month is a bad one. For instance, between the mid-1970s and 2011, the London PM fixing price for October fell by 0.9% on average compared to a 0.6% gain in other months. This often blamed on the brutal behavior of stocks in the same month and the slowdown in gold buying before the Asian wedding season.

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