Monday, June 22, 2009

What's the Best Month to Buy Gold

Well, we sold our gold stocks after May this year, on cue with the old addage "sell in May and go away." We were alarmed that the gold market appeared to be looking a bit toppy, at least in the short term, so we took profits and went to the sidelines.

And now we're "safely" back in cash. BUT - when do we buy back into the market? That's the conundrum involved with selling an asset that's in a bull sell and wait for the pullback, often to find that you lost your position, and are resigned to watch helplessly as the market takes off without you!

Fortunately for us, guest author Jeff Clark is going to dive into this topic today, as he looks at the best months for buying into gold and gold stocks.


When is the Best Time to Buy Gold?
By Jeff Clark, Editor, BIG GOLD

I bet you don’t own enough gold.

Before you tell me I’m wrong, let me ask it this way...
  • If inflation returns, or even hyperinflation...
  • If the economic crisis persists and gets worse...
  • If uncertainty and fear continue, and chaos and rioting begin...
  • If stock markets languish or suffer another meltdown...
  • If the recovery spending of the world’s governments proves futile...
  • If government interference in the economy continues to increase...
  • If the value of the U.S. dollar takes a major fall...
  • If world recovery from the current recession/depression takes years...
  • If you’re still wondering whether you have enough “safe” money...
...would you feel you own enough gold?

If all those things come to pass, I suspect many of us, including myself, would wish we had a few extra gold coins or bars stashed away.

So let’s assume you answered “No” to my question and need to add some ounces to your collection... is now a good time to buy?

The Best Time to Buy Gold?

Before glancing at the chart below, if you had to pick the month with the weakest average gold price, which would you select?

In our current 8-year bull market, June has seen the lowest return for gold. In other words, it’s been, on average, one of the best times to buy.

How does this compare to the bull market of the 1970s?

In the last great bull market, summer also was a good time to buy gold (although April was even better.)

What about gold stocks?

Since 2001, July and October have been the weakest months for gold stocks, as measured by the AMEX Gold Bugs Index, and the best times to buy.

However, keep in mind that these are price tendencies and not certainties. There were Junes when gold was up, and some Julys when gold stocks were up. Meaning, avoid using this chart for trading purposes or in anticipation of an immediate gain. Instead, use it to prepare for possible gold price weakness ahead. And if the weakness shows up, treat it as a buying opportunity and add to your holdings to position yourself for the next leg up in the bull market. Consider that this summer could be the last chance to buy gold for three figures.

Don’t lose sight of where we are at this point in the recession – in an intermission in the bad economic news. When it becomes apparent that the good ole days aren’t coming back, sentiment – and markets – could move rapidly. And gold is one of the best forms of capital that can protect you in a financial Armageddon. That gold was up in 2008 is a reminder of its protective power.

How much gold should you have? Continue to accumulate physical gold until you can honestly say you don’t care how many dollars Ben Bernanke prints.

Having physical gold in your possession is always a good idea in times of economic turmoil – there is no “uncertainty hedge” like it. But to actually make money, you should also look at premium gold stocks. Our current favorite has been so consistently successful that we call it “48 Karat Gold.” Click here to learn more.

Ed. note - I'm a Casey Research subscriber and can vouch for the quality of their research and analysis.

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