posted June 5, 2006

Bargain Buying: Take Advantage of the Summer Doldrums
USAGOLD-Centennial Precious Metals

STOP! Skip ahead to see our exciting 2008 Doldrums UPDATE!

One of the more intriguing curiosities of the current bull market in gold has to do with the annual buying opportunity which seems to crop up in the depths of the summer doldrums.

To make a long story short, gold purchases made in June and July proved very profitable by Christmastime, as shown in the annual price charts (see right) and explained by our following evaluation.

As depicted in the graph below, the end of a 20-yr bear market in gold was marked in 1999, and this new bull market birthed in 2001.

20 Year Gold Price Chart;
Secular Bear Becomes Secular Bull

In focusing especially upon the particular consistencies revealed during each of these past five bullish years of the new trend we can snatch some semblance of order and direction amidst the general noise.

Our first observation is that despite straddling the very middle of the year, pricing patterns in June and July have nonetheless, with near perfect consistency, allowed investors the very latest-possible yearly opportunity to buy gold at levels still below the average annual price.

And the key point here is that one needn't attempt to further refine their weekly or daily timing of action beyond that which is obtained by blind decision -- any random assortment of purchases throughout June and July has averaged out into a opportunistic maneuver.

Should the seasonal trend continue as it has, that in itself is a useful insight for bargain hunters.

But in telling the tale, that only scratches the surface; gold can thus be gotten at comparably good per-annual values, but what of its immediatly-following seasonal performances?

Significant, to put it mildly.

The subsequent seasonal price-gains registered from August until year-end for any random assortment (i.e., average) of gold purchases made during these special two doldrum months of June and July, as demonstrated from 2001 through 2005, have averaged 12.0 percent -- representing an impressive 28.9 percent when annualized.

This certainly turns that old Wall Street adage, "to sell in May and go away," completely on its ear.

The accompanying annual price charts tell the graphic story (see right)...

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Following our initial release of this commentary, USAGOLD-Centennial Precious Metals' founder and president Michael Kosares was requested for an interview by Dow Jones Newswires for use by Dow Jones International News. A copy of the article can be viewed here-- DOW JONES: Summer Doldrums Offer Best Chance to Buy Gold.