Feb

28

Following the usual Holiday/Valentines gold run-up (which was magnified by the flight to safety during the now official NDR bear market), the seasonal winter gold short is set up well this year. There is a weak price period for gold from mid-February until mid-March. Entering a short position on or about February 17 and holding until March 15 on the April contract has been a successful trade 25 times in the past 41 years for a success rate of 61.0% with a cumulative profit of $43,860 per futures contract. However, in recent years holding onto the short position established in February longer has been more profitable.

The chart below is a weekly chart of the price of gold with the exchange-traded note (ETN) DB Gold Double Short (DZZ) overlaid to show the inverse price correlation between the two trading vehicles. The line on the bottom section is the 41-year average seasonal tendency showing the market’s directional price trend with seasonal weakness highlighted in yellow.

 
 
 
 

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