Gold: History Solves the Mystery (Part 4)

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If you were to invest in gold now, historically speaking, you have a 78% chance of making money with just a 17% likelihood of taking a loss in Q1 of 2018.

Years ago, I wrote a report called History Solves the Mystery where I discussed the seasonality and historical performance of gold. In the follow up to that report, History Solves the Mystery Part 2 written in late 2009, I referenced gold’s tendency to rally in the first quarter of the year, often making its Q1 high in what I called “the magical month of March”. Finally, in 2015 I wrote part 3 of the series updating my theory through 2015. Now I will update my theory tracking performance through 2017 and looking to 2018.

To begin, let’s look at 2015-2017. Using both annual and monthly charts and data on Kitco.com I have compiled the following results:

In 2015 gold rallied from approximately $1,170 an ounce to $1,300 in January before finishing the quarter at approximately $1,180. We did indeed see a significant rally in Q1, but March was not very magical in 2015.

In 2016 gold started the year at around $1,075 an ounce, hitting $1,275 an ounce in March and ending the quarter at $1,235. Rally? Check. High in March? Check.

In 2017, gold began the year at $1,150, rallied, hit a high of approximately $1,255 in February and in March, finishing the quarter strong at $1, 245. Again, we had a Q1 rally with a high in the month of March.

As you can see, my theory about a Q1 rally holds and March is still pretty magical. However, this is not news. For the past 8 years, I have been pointing out these historic trends. While we must remember that past performance is not necessarily indicative of future results, let’s look at a yearly chart for all years since 2000.

In the spirit of simplicity, I have chosen to update this report with simple percentages. Utilizing the historical charts from Kitco.com we can observe that since 2000, the gold market has rallied in 14 of the 18 years or 78% of the time. In the 4 years that gold did not rally, the market declined in just 3 years or 17% of the time and trended sideways for 1 year or just 5% of the time.

That means that if you were to invest in gold now, historically speaking, you have a 78% chance of making money with just a 17% likelihood of taking a loss in Q1. If you factor in the sideways year, you have an 83% chance that you will be the same or better off come March 2018.

What does that mean? That means that with gold prices low this December, you have a phenomenal opportunity to make money in the next 90-120 days. Short-term investors can look for quick profits while long-term investors who have been waiting for the “right time” to buy should wait no longer.

If you are one of the unfortunate investors who bought gold at previous highs, this is the ideal time to reposition and dollar cost average in order to take advantage of the probable rallies in Q1 and beyond.

 

Feature Article 12/12/2017: Four Reasons Why You Shouldn’t Count Gold Out Just Yet: Gadfly

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Click the link below to read today’s Washington Post article. Then, contact us to diversify with gold.

Four Reasons Why You Shouldn’t Count Gold Out Just Yet: Gadfly

“With bitcoin sucking up all the crazy in financial markets, gold looks to have lost its luster… That may be overdue a change. Despite suffering its worst week since May last week, the outlook for gold could be stronger now than it has been for several months.”

Feature Article 12/11/2017: Trump’s Tax Plan Could Boost Gold and Silver

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Click the link below to read today’s article from Bloomberg. Then, contact us to diversify with gold.

Trump’s Tax Plan Could Boost Gold and Silver

“The tax plan being considered in Congress would inflate the nation’s budget deficit and expand the debt, Bart Melek, head of global commodity strategy at TD Securities in Toronto, said at the Silver Industrial Conference in Washington. That deterioration in the nation’s fiscal standing is a recipe for higher silver and gold prices, he said.”

 

Bitcoin & Gold coins

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When it comes to Bitcoin and Gold, I think we should choose to focus on similarities rather than differences.

Bitcoin and Gold have a lot in common. Of course, Bitcoin’s recent parabolic rise was much faster than the last big run in gold, but both gold and Bitcoin offer freedom from, and provide opportunities beyond our formal financial system. Both Bitcoin and Gold coins are attractive to those who are concerned with inflation, corrupt banks, the stock market bubble, interest rates, national debt, geopolitical concerns, and more.

After years of trading Futures and Options, I am choosing to focus on physical gold for all the reasons previously mentioned, but that doesn’t mean that Bitcoin isn’t attractive. In fact, I currently own Bitcoin, Litecoin, and IOTA. I am no expert but I understand supply and demand and Bitcoin was an easy call.

So ask yourself, what is your motivation for owning Bitcoin? What are your reasons for owning gold? Why not own both? You can purchase small quantities of gold for about the cost of one Litecoin. Gold investors can get into cryptocurrency for just a few hundred dollars. If Bitcoin corrects (which I expect it to) that doesn’t mean that gold investors should gloat or beat their chests. Cryptocurrency traders are a gold trader’s allies. We value the same things. Likewise, if Bitcoin investors are looking to diversify, gold should be an easy call. All of the things that cryptocurrency offers, gold offers. The moves might not be as fast or dramatic as we have seen in Bitcoin as of late, but the privacy, protection, and profits are there if you know what you’re doing.

– Chris Dickens, Director

Feature Article 12/8/2017: ‘Gold price will explode & dollar get wiped out’ – warns investor Peter Schiff

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Click the link below to read today’s article from Bloomberg. Then, contact us to diversify with gold.

‘Gold price will explode & dollar get wiped out’ – warns investor Peter Schiff

“Peter Schiff was among the few economists who correctly predicted the financial crisis in 2008.

Ten years later, he sees another crisis emerging: a crisis that can crash the stock market and wipe out the US dollar.”

 

 

Feature Article 12/2/2017: I’m a Depression historian. The GOP tax bill is straight out of 1929.

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Today’s feature article is from the Washington Post. In it, historian and author Robert S. McElvaine compares today’s tax and economic policies to those that led to the Great Depression. This is a timely warning. Let’s put politics aside and approach it with an open mind.

I’m a Depression historian. The GOP tax bill is straight out of 1929.

 “As a historian of the Great Depression, I can say: I’ve seen this show before.”

Feature Article 11/29/2017: US markets looking ‘overstretched’ and could trigger a sharp reversal, ECB vice president says

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US markets looking ‘overstretched’ and could trigger a sharp reversal, ECB vice president says

  • The vice-president of the European Central Bank (ECB) warned Wednesday that current high valuations in U.S. equities could spark a possible correction in global stock markets.
  • Speaking to CNBC, Vitor Constancio said: “Certainly the cyclically adjusted price earnings ratio in the U.S. is well-above historical averages”
  • The ECB released Wednesday its biannual Financial Stability Review, in which the central bank points to potential risks to the stability of the euro area

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