frank holmes is the president of us global investors, and thinks precious metals could be strong in september, and then weak in october due to seasonal factors:
Frank Holmes, CEO & CIO, U.S. Global Investors (Holmes): There are several factors that contribute to good times for gold stocks and bullion. Basically, the stars are all aligned, especially for jewelry and financial.
First of all, let's deal with the jewelry demand. Right now kicks off what I like to call the planet's most potent gold demand drivers. The rainy season is over in Thailand, Vietnam, Bangladesh, India, and people have started going out from the village and buying gold. So you move into the post-monsoon wedding season. Then you have Ramadan, the big Muslim holiday, and gold-giving is very significant during Ramadan. Then, in November, is Diwali season - it's extremely festive, the Season of Lights. There's a tremendous amount of gold gift-giving, like for Christmas time. And then there's the restocking that happens in advance of Christmastime by retailers in the U.S. and Europe. After that, it's the Chinese New Year, which peaks things out by February.
The stronger September is, however, there's usually a big correction in October.
Crigger: Why is that?
Holmes: The dollar, which is the financial component in this equation. Going back over 20 years of data, looking at the correlation on weekly price movements, you see that there is a 70% inverse correlation between the direction of the dollar and the direction of gold. So September and December are two months of the year where the dollar is weaker, although last year was a bit of an anomaly.
Historically in September, the U.S. market is down. But what's interesting is that lately, we've seen the market's actually doing better when the dollar is weak. The market corrects - including even gold - when the dollar is strong. Why is that? Because a weaker dollar helps us export.
So people say that a weak dollar is good for gold, so it's bad for America. But now, it's a weak dollar is good for America and it's good for gold! That's the shift we're seeing.
http://www.hardassetsinvestor.com/features-and-interviews/1/1750-frank-holmes-a-september-for-gold.html
