Maximizing Profits by Timing This One Investment
Wednesday, April 30th, 2008
By Michael Lombardi, MBA for Profit Confidential
Here’s a secret for gold investors and a tip for “wannabe” gold investors.
First the secret: While this spring most wildlife is coming out of hibernation from the winter, gold is moving into hibernation. You see, gold, believe it or not, is a seasonal commodity. Typically, gold bullion prices do not move much from the beginning of April until the start of September.
Some proof: Last year, gold bullion started April at about $650.00 U.S. per ounce. By September, gold was at $700.00 — five months, and gold went up an average of just $10.00 a month. Same thing in 2006, as gold was at $600.00 an ounce at the beginning of April and still at $600.00 at the start of September 2006.
In April 2005, gold traded at $420.00 an ounce. By September of the same year, it was up a mere $20.00 to $440.00. In 2004, the metal started April at $400.00 an ounce and was still at $400.00 at the beginning of September 2004.
Why the seasonality factor for gold bullion? I really don’t know, as I see the metal becoming less important as an ingredient of jewelry and more important as an alternative store of wealth to the U.S. dollar.
What I do know is that I do not fight the tape or the trend. The reality is that, over the past five years, the biggest moves for gold bullion have been the period beginning in September and ending in March. Same with gold stocks… they are not big movers in the summer but can be quite volatile from the fall to spring.
And that brings me to my tip.
I’m a big believer that gold prices over the next couple of years will continue their long-term upward trend. So, if you have been reading my columns and are thinking of buying your first gold stock (or maybe accumulating a larger position in gold stocks), you may want to play the seasonality game and look at the metal more seriously in late August, early September of this year.
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
