This has been an interesting summer in the gold market. There have been erratic and somewhat violent eruptions in the ongoing Greece situation which is exposing itself to be an all-out currency war. We have recently had China devaluate the yuan, which is their currency. They did this simply because they just can’t afford to keep the value of their currency artificially high in very much the same manner that then Pres. Nixon was forced to remove the United States from the gold standard and effectively re-open the public gold market back in the early 1970s.
As a side note and a quick history refresher; before Pres. Nixon “closed the gold window” any nation that was owed payment by the United States could take that payment in gold coin or gold bar at the payment rate of $40 per ounce through the public gold market. The “I’ll take the gold rather than the cash” option was becoming more and more popular because those in the know believed that 1 ounce of gold was more valuable than 40 American dollars which were widely believed to be at least inflated if not highly inflated in value.
As it turns out, those naysayers were correct, and shortly after Pres. Nixon disconnected the relationship between the dollar and gold, and allowed the gold market and the laws of supply and demand set the price of gold, gold skyrocketed to north of $800 per ounce in the coming decade, and the gold market went nuts.
But Back To This Millennium And The Current Gold Market…
In addition to Greece in China we also have our own stock market and currency to ponder and question. The stock market is still near all-time highs, although quick gains and violent losses seem to be the norm when good news or disappointing numbers or events are reported, respectively.
And even though the world gold markets have never been managed by so many brilliantly touted and highly paid professionals, there are plenty of warning signs that things can go wrong. If you haven’t heard, China’s largest stock market has declined by roughly 30% so far this summer. If you think this summer that you have been enjoying would be the same if the United States stock markets had plummeted 30% in the past few months, you are mistaken. 2008 would be happening all over again. People losing life savings, people losing homes, people losing jobs, and you remember how the rest goes.
But here in the United States, things still appear to be status quo, so we are being told they are status quo. And, because of this the gold market is doing what the summer gold market usually does and nobody is watching and that’s a shame because the gold market, and the gold coin market, and the gold bar market, and even the rare gold coin market are following a very strong trend and long-term cycle that much more often than not produces relatively quick gains in a relatively short amount of time for the keen buyer of gold and rare gold coins and silver coins and bars as well. But, before I can lay out the cycle for you we have to define one word: summer.
When Is The Summer Gold Market?
My earliest and still strongest definition of summer is that “summer begins on the last day of school before summer vacation and ends the day before you have to go back to school in the fall, and you know the end is near when Jerry Lewis is on TV.” In my mind summer began on the last day of school because you knew the day really wasn’t for school work, it was for turning in textbooks, washing your desk, saying goodbye to friends you probably wouldn’t see for three months, getting your report card, and finding out what teacher you would have next year and who would be in your class. That is the calendar of a simpler time.
Technically however, the first day of summer is defined as the day after the spring equinox and this year that day was June 21st. and accordingly the last day of summer is the day before the autumnal equinox which this year will be September 22. In a way it is not surprising that the technical summer which runs from late June to late September, does not coincide with the golden memories of a child who still insists that summer can only consist of the 90 some days that comprise June, July and August.
Now, however, with two definitions of summer on hand let’s begin to look at what the gold market does over the summer, whether it be in the form of a physical gold coin, or a gold bar, or in some instances rare gold coins exhibit this trend as well.
Once Nixon removed the United States from the gold standard, and allowed the valuation of gold to fluctuate against what was now a fiat US dollar, the gold markets began to treat gold as a commodity rather than a currency. Because of this new market status coupled with the fact that gold is truly rare and costly to mine, the gold market forces of supply and demand went to work, and along with gold’s new job as a commodity came a new schedule. Some might say it’s a “bankers schedule”.
Historically in time and around the world geographically, bankers have enjoyed long vacations in the summer, and that practice is still in force with your upper echelon set of bankers and financiers. And believe it or not, this long-term trend of taking substantial time off to “summer somewhere” is still perpetuated by the calendars of little boys and girls who spend the last day of school turning in their books, washing desks, and picking up report cards.
You see, Americans still take summer vacations and even with the invention of cell phones, emails, and endless market news available via flat screen, the Americans that earn the kind of money that bankers and stockbrokers salivate over still take time to spend a couple or three weeks vacationing away from the stock markets and the gold markets with their kids while they can. For a variety of reasons investment markets, gold markets and other financial vehicle sales slowdown during the summer and this slowdown is reflected almost annually in the dollar price of gold.
If you use the little boy definition of summer, even though school schedules change and there is no more Jerry Lewis on Labor day, the price of gold on June 1 was $1187.40 per ounce. The price for that same ounce of gold on August 14 was $1113.70. If you compare the June 1 price to the January 1, 2015 price of gold which was $1184.60 per ounce then you will see that they are quite close. However, with most of summer behind us the price of gold at $1113.70 per ounce is reflecting a 6% discount over the price of gold at the beginning of this year.
For more market analyses such as this, and to see how profits can be made in the upcoming months as gold markets start to heat up again in the physical gold coin, gold bar, and rare gold coin arenas, contact ITM Trading at 1888 OWN GOLD or at ITMTrading.com.