When trading commodities, it can pay to know information about the various factors that may affect the price of that commodity. Knowing the weather forecast may play a big role in the price of agricultural commodities like corn or orange juice. Gold, like other commodities, also has factors that can affect its price throughout the year. Knowing these factors and the reasons for them can lead to increased profits and smarter trading over time.
Strong Months for Gold
Demand for gold changes throughout the calendar year based upon several cultural factors. Because of this increased demand, the strongest months in terms of price appreciation for gold are September, January, and December. So what is it that drives demand during this time of the year?
India is the world's largest gold consumer. Historically and culturally, the people of India store wealth in the form of gold. As a result, many of the farmers of that country will harvest crops at the end of the monsoon growing season and convert the proceeds into gold. These harvests occur in September and October meaning that demand for gold in India is high during these months.
Also in India, one of the two wedding seasons gets underway during these months as well. Jewelers will buy gold to fabricate into jewelry for gifts. Gift giving also plays a role in gold demand in the United States for both Christmas and Valentine's Day when gifts of gold jewelry would be given.
Gold Stock Strength
It turns out that positive returns in the stocks of gold miners will mirror the strength in the price of gold. It makes sense that gold stock prices will be bid up in response to an increased gold price which would increase the revenue that miners would earn by selling gold. It turns out that historically the strongest months for gold mining stocks are September, December, and February.
Armed with this knowledge, it would make sense to buy gold and gold stocks throughout the months of March until August to take advantage of the seasonal factors that lead to an increase in the price of gold and gold stocks in those strong months. Selling during times of strength would then allow the investor to have cash ready for the next cycle in prices. After all, buy low and sell high is the investor's creed.
 | When learning how to invest in gold, you'll need to consider your approach. You can either own the gold outright or invest in a fund or ETF that invests in the gold for you. |
 | How is gold mined? Gold-hunters can use methods ranging from straightforward hard rock mining to dredging to sluicing. |
 | Want to know how to sell gold? Plenty of scammers are out there, and they might take advantage of you if you don't know how much your gold is worth. |
How did gold get its name? The Romans gave gold a Latin name, but the word we use today comes from the German language. |
How is gold formed? Gold occurs in the earth, but the science behind it is not entirely known. That said, it appears to be related to volcanic activity. |
