Gold Season: Summer Doldrums? Gold News
And How.. Contact Email us Gold Season: Summer Doldrums? Tuesday 6 th May 2008 The seasonal turns in Gold are being overtaken by macro-economic & monetary events.. This summer season - marking a lull in demand - usually lasted until the middle-to-end of August, with the main demand for physical Gold Bullion appearing in the final quarter of the year.
Will Gold go through the same seasons this year? This demand from Indian jewelry buyers was, in turn, driven by the weather. In the past, 70% of India's gold demand came from the agricultural sector, all of which is dependent on the weather and seasons. And after May, crops have to be planted ready for the coming monsoon rains, bringing the crops to fruition in the early-to-middle parts of August. In India, Gold means far more than just jewelry for adornment, however.
It has religious connotations as well as financial importance. Gold makes an auspicious investment during the Hindu festival season, for example - most especially the Diwali festival in October.
What's more, in a country where respect for the civil service, appliers of the law and the tax authorities is extremely low, the attraction of changing your tax-free agricultural profits into Gold and property - and then slipping under the tax radar - is often irresistible. Another key feature of gold's seasonal demand in India - where family remains the heart of society - is the bridal dowry.
Wives don't own assets, but they can own cash, and this gift from the bride's parents is to ensure that the new couple start their married life with financial security. This powerful tradition makes the "marriage season", which comes to an end in May, one of the important factors in the pattern of demand for gold. The climax of this demand also comes together with the Akshaya Thrithiya festival - marked on 7th May in 2008.
It is auspicious to marry in this season, again tying gold together with religious faith. Gold Season: the "Doldrums" In the Western world, the gold jewelry season also becomes becalmed mid-year, as the Christmas and New Year present-giving festivals are furthest away.
The Gold Market then faces a global situation akin to the "Doldrums" - a feature of the Atlantic trade winds between South America and Africa, where the wind suddenly drops and leaves sailing ships stuck, waiting for the trade to winds pick up again. But a glance at the last few years shows a distinct break in that pattern. Take a look at the chart just for the last couple of years, which serves for the purpose of illustrating our point.
Right in the middle of the end-May to early-Sept. 2006, you can see the Gold Price suddenly begin to take off from $542 to the mid-600s, starting from early June to mid-August and actually drifting until mid-October. The seasonality of gold, in short, is being slowly overtaken by macro-economic and monetary events that dictate the Gold Price today. First he worked in Timber Management and then joined the London Stock Exchange, qualifying as a member and specializing from the beginning in currencies, gold and the "Dollar Premium".
On moving to South Africa, Julian was appointed a macro-economist for the Electricity Supply Commission - guiding currency decisions on the multi-billion foreign Loan Portfolio - before joining Chase Manhattan and the UK Merchant Bank, Hill Samuel, in Johannesburg. There he specialized in gold, before moving to Capetown, where he established the Fund Management department of the Board of Executors.
Legal Notice Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold Forecaster Julian D.W.
Phillips have based this document on information obtained from sources they believe to be reliable but which it has not independently verified; they make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Forecaster Julian D.W.
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