The Logic of Selling Gold in May and 'Going Away'
Source: Peter Degraaf (5/20/10)
Should you invest—or should you trade?
Featured is the gold price in 2001. Selling in May and buying back right after Labor Day would have yielded a small profit, provided that the sale was made right at the top in May (not easy).
Featured is the gold price in 2002. Selling gold at the top of trading during May and buying back after Labor Day would have produced a small profit, assuming you were smart enough to wait until the last day of May to sell your gold.
Featured is the gold price in 2003. Selling in May and buying back in September would have caused a loss that year.
Featured is the gold price in 2004. Selling in May and buying back in September would have produced a loss even if you were smart enough to wait 'til the last day in May to sell.
Featured is the gold price during 2005. Selling in May and going away would have cost money that year.
Featured is the gold price chart from 2006. Selling at the top in May and buying back after Labor Day would have paid off, even if you missed the exact top.
Featured is the gold price chart from 2007. Selling in May and going away would have cost money in that year.
Featured is the gold price chart for 2008. Finally we have an example where selling at anytime in May and buying back the first week of September would have produced an obvious profit. However, it was the credit crunch that made this so. Would you have bought gold then? Did you buy gold then?
Featured is the gold price chart for 2009. Selling in May and buying back in September would have cost money even if you were able to catch the exact peak in May.
This is the gold price at the present time. Should you sell in May? Was $1,250 the top for May, or will the price rise to a higher level before June 1?
How about the investor who purchased gold at $260 (the first price visible in this essay) and held on for 10 years to the current $1,180! His or her profit is 353%. On an annual basis, that works out to 35% per year! From this essay, we draw the conclusion that investors make far more money (with very few exceptions) than do traders.
Misinterpretation of current trends by some analysts notwithstanding, the massive amounts of money creation on a worldwide basis guarantees that this rising trend will continue!
Peter Degraaf is an online stock investor with over 50 years of investing experience. He publishes a weekend report for his many subscribers. For a sample copy of a recent edition send him an e-mail at [email protected], or visit his website: www.pdegraaf.com
DISCLAIMER: Please do your own due diligence. Investing involves taking risks. I am NOT responsible for your trading decisions. (Charts courtesy Stockcharts.)
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