Gold Summer Sale!

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Gold investing ‘summer sale’ begins

British investors looking to defend their savings might want to act sooner rather than later, says new research from gold-trading and ownership service BullionVault.com.
The company predicts there are potential gains of 13.7% by the end of the year if the purchase of gold is made now.

Over the last four decades, the gold price in sterling dipped in 20 out of 39 summers, before rising in autumn and winter to end the year higher.

Thirteen of these ‘summer sales’ came during long-term bull runs, such as the period enjoyed by UK gold buyers during the 1970s period of inflation, and again during this decade.

On the 20 occasions since 1969 when gold dipped in the summer before rising by the end of the year, the average gain for UK investors buying in the lowest month between June and September was 13.7% by Christmas.

BullionVault Head of Research Adrian Ash comments: “The summer sale 2009 now offers the steepest discount in gold prices since 1992. There’s no guarantee the typical rally will follow, of course. But from the all-time record peak of £700 an ounce hit in February, gold prices for UK investors have been cut by 18%.”

Adrian Ash continued: “Such ‘summer sales’ in gold can be attributed to a variety of factors, such as weak jewellery demand from Asian and Indian consumers; the stock-market adage to ‘Sell in May and come back on St. Ledger's Day’ in October may also depress gold prices; and because economic and financial news typically slows over the summer. Buying a summer dip failed to pay off in 2000 and again between 2004 and 2006. But with concerns about inflation fast gaining ground, this summer’s current lull could prove a great moment to buy if the most typical shape for sterling gold prices comes good once more.”

Since Gordon Brown sold half the nation’s reserves at rock-bottom prices in 1999, the sharpest gains for UK investors have come over the six months from September to February on average, rising by well over 14% for UK investors.

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