Tuesday, December 29, 2009

January Trends -- GLD

interested in how gold tends to move in January? I took the closing prices for GLD for each January since 2005 (5 years) to see if there was any discernible trend for the month. the result is the chart below.

the far right bar is the average closing price of the last trading day of January, the second to the right is the average for the second to last trading day, and so on to the beginning of the month. depending on the year, the far left bar may be the first trading day of January or the last trading day of December.

this only takes into account 5 years of data (because GLD hasn't been around longer than that) but the chart is pretty clear; gold likes to advance in January.

does that mean it will next month too? no, not really. what it certainly means is that a lot of people expect it too. the metal's January reputation is common knowledge by now. so, if a counter-seasonal move develops in the next month it could really be explosive.

do you bet on the seasonality? or do you bet against people betting on the seasonality? tough one.