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Mickey Fulp: How to Play Gold Price Seasonality
In both bear and bull markets the gold price tends to follow certain trends. Mercenary Geologist Mickey Fulp explains how investors can benefit.
Mercenary Geologist Mickey Fulp has been writing about the seasonality of the gold price lately, and at last week’s Vancouver Resource Investment Conference (VRIC), he explained the basics to the Investing News Network.
In short, said Fulp, each year the gold price tends to peak in June, then bottom out during the summer. From there, it starts to recover through to October, and then flattens out before rising as Christmas approaches. There’s then a drop off at the end of the year before a “big January rise as bullish feeling comes in in the new year.”
What’s particularly key to note is that those trends are in play whether there’s a bull market or a bear market. And by being aware of those trends, investors of all types have the chance to profit. “The idea is that there’s a seasonality in the gold price that speculators, traders and even hoarders can take advantage of,” Fulp explained.
Other topics covered by Fulp include:
- The most important factor currently impacting the gold price.
- The commodities he’s currently bullish on.
Watch the video above for more insight from Fulp. And don’t forget to check out the rest of the Investing News Network’s VRIC videos.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
VRIC 2016, Day 1: Notes from the Floor
VRIC 2016, Day 2: Notes from the Floor
This article was updated on March 1, 2016 to include the following interview transcript:
INN: I’m Charlotte McLeod with the Investing News Network, and here today with me at VRIC is Mercenary Geologist Mickey Fulp. Thank you for joining me today.
MF: Thanks, Charlotte. Always my pleasure.
INN: Recently in your work you’ve been focusing on the seasonality of the gold price. Can you briefly explain that concept for me?
MF: We’ve produced over the course of two or three months four treatises on how gold moves in the seasons. We really focused initially on shorter-term phenomenon and then expanded that to a 20-year record for gold. The idea is that there is a seasonality in the gold price that speculators, traders and even hoarders of gold can take advantage of.
What we found is from a June 1 high, then you have a summer doldrum low which starts to recover post-Labor Day, goes up through October — and that makes sense with the Indian wedding and festival seasons — kind of goes flat for a while and then rises toward Christmas as the so-called “love” trade comes in in the west, where every guy is buying his wife, his girlfriend and/or his mistress a bauble of gold. And then [the gold price] kind of drops off at the end of the year and then we have this big January rise as bullish feeling comes in the new year.
INN: And this is all happening no matter if it’s a bull market or a bear market?
MF: Yes. So the last one was the 20-year record, and we combined 20 years in segments. So from June 1 through Halloween, from November 1 to January 31. And then we looked at the big picture from June 1 to January 31 in all markets, and then we separated those into bull market and bear market years, and we see basically the same patterns with some divergence, but the complete pattern holds in bull or bear markets.
INN: So if you’re an investor, how can you use this information to your benefit?
MF: I would say that it’s very difficult to invest in gold because it doesn’t always provide a constant return. That’s what an investment is designed to do. So you have the speculators in gold, the traders in gold and then people like me who hoard gold. So if you’re a trader, a speculator in gold, you should buy sometime in July, early July to mid-August, and be prepared to sell your gold in mid- to late January. And if you’ve done that [you’ll have a] 6-percent return on that over a 20-year period. If you’re a hoarder like me, you just buy in the summer and sit on your gold.
INN: Other than seasonality, there are definitely other factors impacting the gold price. Right now, I hear a lot about the US dollar. What do you think is the most important factor to be watching in regards to gold?
MF: The US dollar. So this started out, our treatises on gold, started out with doing correlation coefficients on gold. And there is a strong negative correlation with dollar rises — extremely high. The latest one being somewhere around -0.92, which is almost a perfect correlation. As the US dollar rises and falls, gold’s been going up and down, almost with perfect negative correlation.
There are other factors that commonly either cause rises or falls in [the] gold price — geopolitical events, we’re finding that has a lesser impact now. And safe-haven, insurance-policy sort of buying, which is kind of what I do too. But right now it appears that the world looks at the US dollar as more of a safe haven that it does gold. And that’s somewhat unusual.
INN: In closing, we’re here at VRIC, and people are here to hear what experts think. What are you looking at right now? What are you bullish on and focused on?
MF: Well, I’ve been writing lately on two subjects — on gold, and we really did discuss that. [One of my recent reports is] titled “Why Gold Ain’t Goin’ Anywhere Anytime Soon.” So I think gold is fairly valued right now. But what I’m looking at is uranium and the changing world of uranium worldwide. We’re still building 66 new reactors under construction. One hundred fifty-eight in the planning, financing, pouring concrete, initial footing sort of stage. So really looking at uranium kind of to lead [us out] of a very deep bear market for commodities.
INN: Sounds like lots of new sources of demand coming for uranium.
MF: Uranium’s coming on, you know — when it’s going to happen, when we’re going to end up with shortages, it’s a bit of an equivocal analysis. We see everything from 2017 to 2021 by other analysts, and sometime in the mid term and with a long-term view, uranium’s got to increase.
INN: Thank you so much for joining me today.
MF: Thanks, Charlotte, as always.
INN: Once again, I’m Charlotte McLeod with the Investing News Network and this is Mickey Fulp.