September – The Best Month To Invest In Gold (Plus An Overview Of The ARTAIS Seasonal Strategy)

Historically September is the strongest month for gold. Let’s look at the performance numbers and how the ARTAIS seasonal strategy takes advantage of this trend. (Flickr/shine_blitz_on)

Gold Prices In September:

Gold prices have started to rise again. This is no surprise as September is historically the strongest month for gold, in terms of price performance.

Since 1980 gold has averaged a gain of 1.7% during the month of September, making it the best month of the year for the metal:

Source: Bespoke Investment Group

ARTAIS Seasonal Strategy:

Of course, this data lines up nicely for the seasonal model that is used in the ARTAIS Spoke fund. The strategy (1/3 of the fund invests in the seasonal strategy), recommends buying and holding gold for the month of September. The rules for the seasonal strategy are as follows:

Technology Sector: 

Invest in the technology sector at the close on the last trading day of October. Sell investments in the technology sector at the close on the last trading day of January.

Energy Sector:

Invest in the energy sector at the close on the last trading day of January. Sell investments in the energy sector at the close of the last trading day of May.

Summer Months:

Hold cash (or money market) during June, July and August.

Gold:

Invest in gold at the close on the last trading day of August. Sell gold at the close on the last trading day of September.

Avoid October:

Stay in cash during October.

 

Let’s Backtest The Seasonal Model:

How does this strategy actually perform? Using Amibroker, I added the rules above, and to make things simple I used mutual funds to represent each category (In ARTAIS I use only ETFs):

Technology – “FSPTX” Fidelity Select Technology

Energy – “FSENX” Fidelity Select Energy

Gold – “FSAGX” Fidelity Select Gold

For cash/money market, I used 0% interest rate since the rates fluctuate over time and can enhance the returns when rates are high (the 1980′s for example).

The Fidelity Select Gold didn’t start trading until 12/16/1985, so I will use 1/1/1986 as our start date:

 

Annual Return  22.63%

Ulcer Index 9.33

Sharpe Ratio of trades 0.99

Avg. Profit/Loss  7.95 %

Pretty impressive results for a strategy that only trades a few times per year.

 

One Last Note:

The seasonal model I use in the ARTAIS Spoke Fund is based on research I came across back in 2005 by Jay Kaeppel.

2005 research:  KAEPPEL’S CORNER: Sector Seasonality (or, “If It’s November, I Must Like Technology”)

 

Jay also has a great book that goes into detail on various seasonal trends - Seasonal Stock Market Trends: The Definitive Guide to Calendar-Based Stock Market Trading

Don't Make The Same Mistakes! Get My Free Report
The 7 Mistakes Investors Are Making Right Now
Find out if you are making some of the same mistakes that investors typically make.

Back to top ▴