...waren bisher "immer" Verlustbringer. Ob das diesmal anders wird? Wohl nicht...
Gold in an election year
Cliff DrokeDid you know that in election years gold has a historical tendency to put in a negative performance? This little-known seasonal factor, which may or may not prove to be useful for navigating the gold market in 2004, should at least be kept in mind throughout the year by gold traders and investors.
Note the long-term gold chart above, highlighting the performance of gold prices in election years. You can see from this chart the historical tendency I refer to in this article. For example, beginning with 1976 (the after gold was opened to the American public) gold put in a net sideways performance with only a $2 gain for the year. The dominant pattern in the gold price that year was that of a V-shaped movement with prices little changed when measured from January through December. This was the year that Jimmy Carter, a Democrat, was elected president.
The next presidential election in 1980 was a banner year for gold, but not quite so bullish as most people seem to remember. Gold put in its top in January of the year and then rapidly sold off for the next few months. This was followed by a mild recovery and then a sideways-to-lower move into the election month of November. For the year gold was up but $80 off its January closing high. In 1980 Ronald Reagan, a Republican, was elected president.
In 1984, the year President Reagan was re-elected, gold was down some $50 for the year. In 1988, the year George Bush Sr., a Republican, was elected, gold was down $60 for the year.
In 1992, the year that saw the Democrat Bill Clinton elected to office, gold was down $20. In 1996, a re-election year for Clinton, gold was down $30 for the year. Most recently, in 2000, the year of George Bush Jr.'s election, gold was down $10 for the year.
We have to go all the way back to 1972 to see the last time that gold put in a truly bullish performance when measured from start to finish during an election year.
From a contrarian standpoint I'm also concerned by the rather conspicuous manifestation of bullish sentiment on gold on the part of investment advisors. Most advisors are forecasting a highly profitable year for the yellow metal and there seems to be near unanimity among them that gold will put in a repeat of the 2003 performance. Also worth pointing out is the number of times pictures of gold bullion have shown up in newspaper and magazines whenever accompanied by a bullish story on gold. This usually signals that investor sentiment has reached a fevered pitch ("gold fever") and needs to be corrected somewhat before the uptrend can continue.
I'm not writing to paint a bearish picture on gold for 2004 (especially since my focus is mainly short-term forecasting). I'm the first to recognize that sudden shifts of trend can happen at any point along the curve. I'm just pointing out what I consider to be salient facts that suggest that gold *may* have to struggle with supply pressure for a good part of the year. We might have to wait until the historically bullish "5" year (2005) until we see another super-charged performance for gold on an intermediate-term basis. But as always, only time will tell!
February 27, 2004
Clif Droke is the editor of the Durban Deep/XAU Report, a daily forecast and analysis of DROOY, GLG, KGC, XAU, HUI, and GOX written especially for day traders. He is also the author of numerous books on finance and investing, including the top-selling "Moving Averages Simplified." Visit his web site for free samples of his analysis at www.clifdroke.com
