Long-term analyses of gold price trends show that there are seasons or even individual months in which demand for gold is particularly strong or particularly weak. This impacts the gold price. An analysis of the past 56 years yields interesting results, which should be treated with discretion, as far-reaching geopolitical events and economic crises do not adhere to seasons. Still, the empirical data is quite interesting.
Wait until January to sell – at least in theory
Gold is primarily a long-term investment. The precious metal has historically proven its worth as a store of value and a hedge against inflation and also serves as a portfolio stabilizer. If investors nevertheless wish to sell part of their gold allocation to increase their liquidity or realize price gains, it can be wise to wait until January, according to the latest study by Goldreporter. Since 1970, gold gained in 37 of 56 years during this month. At the same time, the appreciation of 2.8 percent on average is the highest compared to all other months. However, price fluctuations in January are also the strongest, ranging from a 28.64 percent increase to an 11.35 percent decrease, which serves to show how little empirical data ultimately can tell.
Timing for purchases is easier to determine
Investors who wish to add gold to their portfolio can benefit from a gold allocation at virtually any time – provided it is purchased with the intention of a long holding period. Since gold is known to shine brightest in the long term, the right time to buy and the respective gold price are not as important as the investment horizon. Over longer periods of time, gold has always appreciated, while the fiat currencies used to measure price developments have lost value. A second but no less important reason to buy gold regardless of the specific timing is the fact, proven by numerous studies, that even a 5 to 10 percent gold allocation can improve the risk-adjusted return of a typical stock/bond portfolio.