Tags: October | cruelest | month | gold

MarketWatch's Hulbert: October Is the Cruelest Month for Gold

By Dan Weil   |   Friday, 28 Sep 2012 08:37 AM

Gold has been on a nice run over the past two months, rising 11 percent. But watch out, says MarketWatch columnist Mark Hulbert. October is historically the worst month for gold.

He put together this chart of average monthly returns for the metal going back to 1980.

Month
Gold's Average Return
January 1.23 percent
February -0.57 percent
March -0.79 percent
April 0.87 percent
May 0.18 percent
June -0.02 percent
July 0.07 percent
August 1.28 percent
September 2.20 percent
October -0.80 percent
November 1.99 percent
December 0.43 percent
Avg of all months except October 0.54 percent


“It seems unlikely that this [October’s underperformance] is attributable to chance,” Hulbert writes.

Editor's Note:
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So, what explains it? Hulbert says the best explanation he has seen comes from John LaForge, a commodity strategist at Ned Davis Research – the seasonality of Indian jewelry demand.

About 50 percent of gold demand comes from jewelry buyers, and that market is dominated by India. Indian demand usually accelerates around the time of its Diwali festival, which lasts five days and begins between mid-October and mid-November.

Gold usually hits a low just as Diwali starts, which is Nov. 13 this year. So, until then, look out below.

December gold futures closed at $1,781.40 an ounce Thursday.

Still, plenty of market participants are bullish on gold for the long term.

Richard O’Brien, CEO of Newmont Mining, the largest U.S. gold producer, tells Bloomberg the precious metal might hit $2,500 in the next three to four years.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

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Gold has been on a nice run over the past two months, rising 11 percent. But watch out, says MarketWatch columnist Mark Hulbert. October is historically the worst month for gold.
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