Friday, May 21, 2010

Peter DeGraff Debunks Selling In May, Buying Back In September

Over at GoldSeek, Peter de Graaf has gone through charts of gold that cover the May-September period from 2001 to this year. He found that selling in May and coming back in September would have cost money in most cases. The only years in which the strategy really worked were 2006 and 2008.

His charts do show, though, that summer doldrums do kick in most years - but the overall point he makes, that it's best to simply buy and hold, is a good one.


  1. Daniel,

    This is a really good article to post and I hope people have read it an learned a thing, or two. I know that I am going to save a copy and share it with my friends. Thanks!

    Also, I had a friend yesterday tell me he recently went downtown and purchased some Gold Maple Leafs for a little over $1400/Oz. As he told me this, my jaw nearly dropped....but I didn't let on that I was taken aback - and a bit angry that some coin dealer ripped him off. He told me he bought this gold as a result of a previous discussion that he had with me concerning investing in Gold as a means of perserving wealth. I remember this conversation...and I repeatedly told him during the conversation not to buy Gold unless he knew what he was doing and to certainly ask for some advice before his first purchase. Of course...he didn't. However, if he hold on to these Gold coins for a few years, he'll make some money anyways.

    However, it always seems to happen: ya' tell people Gold is Good, but to get some advice before their first purchase - and they go out and do it on thier own anyways and get reamed.

    Unfortunately, these same people will probably panic if the price of gold falls below a $1000 and sell thier gold at a tremendous loss...without ever realizing that they should have been buying at that time...not selling.

    I read stories all the time that the price of Gold will fall below $800 and stay there. These stories are wrong for the cost of producing Gold is never gonna' fall below $800. However, I would love to see a Gold Panic happen and the price of gold fall back to the high $600's like it did a couple of years ago...what a good time to buy that was, if ya' could even find the gold! And it's this outlook that I most try to impart to the those who are just starting to invest in Gold - "When the Gold Price crashes, Rejoice...for that is the time to buy more Gold!" But no one seems to listen to this advice either.

    Oh well...enough ranting for me.

    Thanks again for linking to this article.

  2. I'm glad you liked it, John. It certainly opened my eyes.

    It's a shame that your friend paid so much, but that's how some people learn. If it's not his last purchase, he can average down.

    Gold at $800 would be a real bargain, and it would call forth a lot of people who kicked themselves for not buying at $700 when the TARP was unveiled. Come to think of it, so would gold at $1,000...

    Thanks for the comment. You've helped others by posting your friend's story.