Many analysts focus on the seasonality of Gold and Silver. Why? It plays out most of the time. The metals tend to peak in the late spring and then bottom in the early summer before moving into the sweet spot of the year. When researching seasonality, I came across this chart from equityclock.com that shows the seasonality of the XAU Gold Stock Index.
The Philly Gold & Silver Index (XAU) is weighted towards the senior companies and not just large producers. There tends to be three strong periods. The strongest time is typically late summer to early February. Major market declines in October have amplified what is a typically soft period for the XAU. Finally, there tends to be a spring rally.
My chart below shows GDX and GDXJ. We can see that GDX has thrice tested support in the $53-$55 area. GDXJ has thrice tested support at $33-$34.
The technicals tell us that the gold stocks have begun a rally. Also, our last article noted that gold stocks are woefully underowned in both the short and long-term. The hot money has recently poured into Oil, Silver and equities. Finally, seasonal analysis calls for higher prices two months from now. For more analysis and professional guidance consider a free 14-day trial to our premium service.
Good Luck!
Jordan Roy-Byrne, CMT
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