I have always been a little skeptical of seasonal trading patterns in anything other than agricultural products.  After all, what sense does it make that financial instruments not based on weather would follow any kind of calendar pattern?

With that beings said, I have recently noticed a seasonal pattern that has me excited.  Over the last six summers, there has been a trading opportunity that has presented itself over and over again.

I think I have mentioned in the past that gold timing has never been a specialty of mine.  I’m not sure why that is.  I used to work for a great gold timer and I followed the same indicators he did, but my timing always seemed to be off.

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That is until now.  Looking at a weekly chart of gold over the last seven years, I noticed something that should be glaring.  Just in case it isn’t as glaring as I think it is, I have taken the liberty of making some arrows on the chart below.

Do you see it?  It isn’t hard to see. 

Over the last six summers, gold has bottomed somewhere between mid-May and mid-July.  In most cases, the bottom has been between late June and mid-July with two exceptions.

You should also note that the 50-week moving average has been incredibly important during this phenomenon.  This trendline has served as a launching pad for some incredible bullish moves in gold.

Over the last three months, gold has pulled back from its first trip north of the $1,000 mark to as low as $850 an ounce.  Right now, the 50-week moving average is right at $820 and is within reach.

Given my history with gold, you will excuse me for still being skeptical of my own observation.  But, the way I see it, either gold is going to hit its 50-week moving average in the next few weeks and take off on another glorious run, or it is going to break this pattern and drop through the 50-week.

I have mentioned before that I consider poker and trading to be very similar and that you have to play the odds and put your money in when the time is right.  Well, over the next few weeks I will be waiting for my chance to put my money in the pot.

If I am wrong, it shouldn’t take long to figure it out.

Good luck and good trading,

Rick

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