Research carried out by Glint shows the best time to buy gold is spring and summer, ahead of a significant price rise towards the end of the year.
The well observed phenomenon of gold’s seasonal price changes shows summer is the best time to buy the yellow metal. Typically the gold price falls lower during late spring and early summer, before rising almost five basis points throughout August, September and October.
“Gold definitely has a distinct seasonality when it comes to price,” said Aalok Sathe, fund manager at Hinde Capital, who undertook the research for Glint. “If you’re looking to buy gold our research shows the best time of year to buy is between March and June. The average gold price at that time, over the last 40 years, is relatively low. Between July and October it rises significantly, staying high until the end of the year.”
The rise towards the end of the year typically aligns with the beginning of the monsoon in India, rising towards the Hindu festive period of Diwali in October or November. The other major rise, at the beginning of the year, coincides with Chinese New Year, at event that has made a big impact on the gold price over the last ten years.
“In 2002 the Chinese liberalised the gold market allowing individuals to have ownership creating a trend that has seen China surpass India as the largest gold consumer in the world by volume and value,” said Aalok Sathe, fund manager at Hinde Capital.
In a seminal book on gold, called ‘the Golden Constant’ Ray Jastram empirically proved that gold held its purchasing power over millennia. Additionally, Hinde Capital and the Hinde Gold Fund published research examining the constancy of gold in any one year. Written in August 2009 the piece entitled Aurophobia, literal meaning ‘fear of gold’, observed seasonality of gold price movements. The research showed that an emerging buyer was reshaping and extending the seasonal period. This emergent buyer was China.
The seasonal price trends of gold is good news for those looking to use gold as spending money for their summer holidays. The average annual price trend suggests gold buyers will be able to stock-up early in the year and then enjoy a windfall over the summer and autumn as the gold price rises.
Spending a golden windfall
Use of gold as currency within the global payments system has been facilitated by Glint. Users can spend gold as currency on a Glint Mastercard, managing their account via the Glint app.
“Our aim is to make gold the global currency by making it instantly accessible and liquid. When you make a payment we sell the corresponding amount of gold in your account and transact in the local currency within 200 milliseconds,” said Jason Cozens, CEO & founder of Glint.
“Gold has always been known as real money and is understood and accepted everywhere. Now people can use it as inflation proof money. Glint charges 0.5% when you buy gold and 0.5% when you spend it. That’s it.”
“A great way to use Glint is abroad. We don’t charge you anything extra and our conversion rates are interbank. If you spend £200’s worth of gold we’ll charge you just £1. That cost can easily be offset: Our research shows that if you’re buying gold earlier in the year you could well be making a profit on it by year end.”
Gold is seen by investors and savers as a safe hedge against the fluctuations of paper currency. For thousands of years it has been used as money and is still used by central banks worldwide to back their reserves.