This gold fund usually shows seasonal strength from mid-November to early December.
SPDR Gold Shares (GLD)
From Stock Trader’s Almanac
Gold prices tend to move up prior to the holidays, and the trend has worked especially well over the last 15 years. Seasonally speaking, it is best for traders to go long on or about November 18 and hold until about December 3. Over the last 40 years, this trade has worked 22 times for a success rate of 55.0% .The cumulative profit tallies up to $25,990. Up until two years ago this trade had been profitable for 12 straight years (2000-2011). The longer-term history of this trade is not as good, nonetheless profitable. Gold has had another tough year, but this is a short-term trade and gold has become oversold and appears ready for a bounce.
The chart below shows the correlation between gold and the exchange-traded fund SPDR Gold Shares (GLD). This fund’s single holding is physical gold bullion. GLD currently holds 666.11 tons of gold giving it a market valuation of approximately $23.28 billion. GLD’s price line has been overlaid on the front-month gold futures contract. The line on the bottom section is the 40-year average seasonal price move for gold with the yellow shading highlighting seasonal strength from mid-November to mid-February. This trade targets the beginning of this seasonal move that typically peaks the first week of December. Last year, this trade was successful as gold bounced in early-December and eventually peaked in late-January.
GLD’s stochastic, relative strength and MACD indicators are all at or just off of oversold levels while GLD is trading right around its multi-year low reached in July. GLD is attractive at its current price with a buy limit of $104.50. Once a position is established, a stop loss of $99.90 is suggested.
Jeffrey A. Hirsch, Stock Trader’s Almanac, 800-762-2974, November 10, 2015