It is not a little known fact that certain portions of the 4-year U.S. election cycle tend to witness above average stock market performance. Is it possible the same might be true for gold stocks?
Let’s examine the possibility.
The Gold Stock Election Cycle Calendar
Figure 1 displays my unofficial “Gold Stock Election Cycle Calendar.”
Figure 1 – Jay’s Unofficial Gold Stock Election Cycle Calendar
Figure 2 displays the growth of $1,000 invested in ticker FSAGX (Fidelity Select Gold Sector Fund) only during the months labeled “Miners” in Figure 1.
Figure 2 – Growth of $1,000 invested in FSAGX during months labeled “Miners”; 1985-2017
Figure 3 displays the growth of $1,000 invested in ticker FSAGX only during months NOT labeled “Miners”.
Figure 3 – Growth of $1,000 invested in FSAGX during months NOT labeled “Miners”; 1985-2017
For the record:
*$1,000 invested during the months labeled “Miners” grew +3,766% to $38,662.
*$1,000 invested during the months NOT labeled “Miners” declined -87.5% to $125.
Probably the main thing to note is that anyway you cut it gold stocks are extremely volatile. Figures 4 and 5 display the 12-month % profit/loss for both the favorable and unfavorable periods displayed in Figures 2 and 3.
Figure 4 – Rolling 12-month % rate-of-change from holding FSAGX during months labeled “Miners”; 1985-2017
Figure 5 – Rolling 12-month % rate-of-change from holding FSAGX during months NOT labeled “Miners”; 1985-2017
*The “Miners” months had a maximum 12-month gain of +74.3% and a maximum 12-month loss of -16.6%.
*The “Non Miners” months had a maximum gain of +71.7% and a maximum 12-month loss of -63.1%
Summary
As a student of seasonal market trends I find all of this very interesting. Nevertheless, given that the “good months” depicted herein can still witness some significant “downs” and that the “non good months” can still witness some very significant “ups”, it seems best to avoid the temptation to think that any sort of gold stock ”magic bullet” exists.
Never hurts to look for an “edge” though.
Jay Kaeppel
Disclaimer: The data presented herein were obtained from various third-party sources. While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information. The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.
