by Adam Hamilton
The red-hot gold stocks have spent most of March in consolidation mode, grinding sideways near their 2016 highs. Interestingly this month’s rally pause is par for the course seasonally in gold-stock bull markets. Like gold itself, this sector tends to slump to a seasonal low in mid-March before embarking on a strong spring rally in April and May. With gold stocks back in a bull, their seasonality warrants consideration.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.