A seasonal move upward could greet gold in ’87

A tendency for gold prices to hit a seasonal peak early in a new year could be repeated in 1987, says Paul Roberts, a mines and metals analyst with Andras Research Capital.

He is not alone. The traditional early-year rally in gold prices is referred to by several analysts, some of whom claim it as their own discovery. James Dines, for instance, calls it “Dines’ rule of gold seasonality.”

Mr Roberts, on the other hand, is pointing out the phenomenon. He has charted the weekly range record for gold since the price was disengaged from the U.S. dollar in 1971 and says the results show that “seasonal price patterns exhibit sufficiently regular and repetitious behaviour to warrant serious investor attention.”

Seasonal swings are more evident in times of flat or neutral trends, he says. Today’s general but gentle uptrend, therefore, is vulnerable to the seasonal pattern.

“Seasonal patterns have been especially prevalent since the American dollar peaked out in early 1985. The correction into the spring of this year, the exponential price surge into mid-October and the subsequent retrenchment into late November were entirely consistent with the historical norms.”