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INTERVIEW:Summer Doldrums Offer Best
Chance To Buy Gold
By Jim Hawe
Of DOW JONES NEWSWIRES
Dow Jones International News
 (c) 2006 Dow Jones & Company, Inc.
June 14, 2006
TOKYO (Dow Jones)--Along with
surfboard wax and sunscreen, you just might want to add a few
Krugerrands to your early summer shopping list as June and July
will present the best opportunity to buy gold for the rest of
this year, according to one industry insider.
"We usually get a price
decline or at least a stabilization in the gold price beginning
with a 'June swoon' that allows the investor to purchase below
the average for that particular year," said Michael Kosares,
president and CEO of Denver-based precious metals firm Centennial
Precious Metals.
"Summertime has proven
to be the best time to buy gold."
During a typical year, gold
trading volumes fall considerably in June and July in what market
watchers dub the "summer doldrums".
"People simply go on vacation
both mentally and physically. That applies both to investors
and professional investment advisors," said Kosares, who
authored the book "The ABCs of Gold Investing".
The investment business in
general tends to fall into a lull during the summer months and
gold is no exception. These doldrums run from June until the
middle of August when the jewelry industry begins gearing up
for demand linked to various year-end festivals and celebrations
around the world.
Usually around mid-August investors
also start thinking about shaping up their portfolios, which
contributes to a late summer lift in investment interest.
"It's like someone throws
a switch and everything returns to normal," said Kosares,
who has been spotting gold market trends for more than 30 years.
Looking at price movements
since 2001, the first year of the current gold bull market, Kosares
noticed that any purchase of gold made during the months of June
and July resulted in a profit come Christmas time.
"Purchases made during
the summer doldrums were up by an average of 12% by the year-end
holidays, according
to our study," he said.
And these gains have generally
gotten bigger each year. According
to Kosares' study, the price of gold at the end of 2001 was
up 2.8% from the summer doldrums period, but this increased to
9.5% in 2002, 17.7% in 2003, 10.2% in 2004 and a whopping 20%
in 2005.
"Over the last four years,
you could have picked up the phone at any time between bouts
of chasing the wily trout or that little white ball and purchased
a winning gold position," he said.
Autumn Bounce Could Put
Gold Back Over $700
So what kind of autumn gold
bounce can be expected this year? Kosares said if the current
gold correction bottoms in the $600/oz area, the yellow metal
could end the year around $675 based on the average 12% gain
over the summer doldrums period seen over the past five years.
However, if the 20% gain seen
in 2005 can be repeated in 2006, gold price could be around $720
come New Years. Gold was trading at $606.85/oz Monday morning
in Asia.
But Kosares is even more optimistic
and thinks there is a good chance gold will top its 26 year-high
of $725 hit in early May and make
a run at $760, if not higher, by year's end.
"This summer could potentially
be the best buy opportunity since the current bull market began,"
he said.
That could mean investors who
sock away some gold now may have more to show for their summer
of 2006 than just a nice tan.
-By Jim Hawe, Dow Jones Newswires;
813-5255-2950; jim.hawe@dowjones.com
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