金鉱株の春ラリー4 by Zeal
ゴールド、金鉱株の季節性はこれまでにも何度も書かれています。そのアップデートです。最後の2段落だけ訳しておきましょう。
Gold Stocks’ Spring Rally 4
Adam Hamilton March 1, 2019 3004 Words
The
gold miners’ stocks have been climbing higher on balance, enjoying a
solid upleg that is gathering steam. That’s fueling improving
sentiment, driving more interest in this small contrarian sector.
This gold-stock upleg is likely to grow in coming months, partially
because of very-favorable spring seasonals. The gold stocks’
second-strongest seasonal rally of the year typically unfolds
between mid-March to early June.
Seasonality is the
tendency for prices to exhibit recurring patterns at certain times
during the calendar year. While seasonality doesn’t drive price
action, it quantifies annually-repeating behavior driven by
sentiment, technicals, and fundamentals. We humans are creatures of
habit and herd, which naturally colors our trading decisions. The
calendar year’s passage affects the timing and intensity of buying
and selling.
Gold stocks
exhibit strong seasonality because their price action mirrors that
of their dominant primary driver, gold. Gold’s seasonality
generally isn’t driven by supply fluctuations like grown commodities
experience, as its mined supply remains fairly steady year-round.
Instead gold’s major seasonality is demand-driven, with
global investment demand varying dramatically depending on the time
in the calendar year.
This gold
seasonality is fueled by well-known income-cycle and cultural
drivers of outsized gold demand from around the world. The
seasonal gold year starts in late July as Asian farmers begin
reaping their harvests. They plow some of their surplus income into
gold. That’s soon followed by the famous Indian wedding season in
autumn, with its heavy gold buying for brides’ dowries during
marriage-auspicious festivals.
After that comes
the Western holiday season, where gold jewelry demand surges for
Christmas gifts for wives, girlfriends, daughters, and mothers.
Following year-end, Western investment demand balloons after bonuses
and tax calculations as investors figure out how much surplus income
the prior year generated for investment. Then after that Chinese
New Year gold buying flares up heading into February.
These
understandable cultural factors drive surges of outsized gold demand
between late summer and late winter. But interestingly there is one
more gold-demand spike in spring. Over the years I’ve seen a
variety of theses explaining this mid-March-to-late-May gold rally,
but nothing definitive like for the rest of the year’s seasonality.
As silly as it sounds, I suspect spring itself is the reason
for this demand surge.
Sentiment
exceedingly influences investing, which requires optimism for the
future. Investors won’t risk deploying their scarce capital unless
they believe it will grow. And the glorious expanding sunshine and
warming temperatures of spring naturally breed optimism. The
vast majority of the world’s investors are far enough into the
northern hemisphere that spring has a major psychological impact,
buoying their spirits.
Since it is gold’s
own demand-driven seasonality that fuels the gold stocks’
seasonality, that’s logically the best place to start to understand
what’s likely coming. Price action is very different between bull
and bear years, and gold remains in a young bull market.
After being crushed to a 6.1-year secular low in mid-December 2015
on the Fed’s first rate hike
of this cycle,
gold blasted 29.9% higher over the next 6.7 months.
Crossing the +20%
threshold in March 2016 confirmed a new bull market was underway.
Gold corrected after that sharp initial upleg, but normal healthy
selling was greatly exacerbated after Trump’s surprise election
win. Investors
fled gold to chase the taxphoria stock-market surge. Gold’s
correction cascaded to mammoth proportions, hitting -17.3% in
mid-December 2016. But that remained shy of a new bear’s -20%.
Gold’s last mighty
bull market ran from April 2001 to August 2011, where it soared
638.2% higher! And while gold consolidated high in 2012, that was
technically a bull year too since gold just slid 18.8% at worst from
its bull-market peak. Gold didn’t enter formal bear-market
territory at -20% until April 2013, thanks to the crazy
stock-market
levitation driven by extreme distortions from the Fed’s QE3 bond
monetizations.
So
the bull-market years for gold in modern history ran from 2001 to
2012, skipped the intervening bear-market years of 2013 to 2015, and
resumed in 2016 to 2019. Thus these are the years most relevant to
understanding gold’s typical seasonal performance throughout the
calendar year. We’re interested in bull-market seasonality,
because gold remains in its latest bull today and bear-market action
is quite dissimilar.
Prevailing gold prices varied radically throughout these modern
bull-market years, running between $257 when gold’s last secular
bull was born to $1894 when it peaked a decade later. All these
years along with gold’s current bull since 2016 have to first be
rendered in like-percentage terms in order to make them
perfectly comparable. Only then can they be averaged together to
distill out gold’s bull-market seasonality.
That’s accomplished by individually indexing each calendar
year’s gold price action to its final close of the preceding year,
which is recast at 100. Then all gold price action of the following
year is calculated off that common indexed baseline, normalizing all
years regardless of price levels. So gold trading at an indexed
level of 105 simply means it has rallied 5% from the prior year’s
close, while 95 shows it’s down 5%.
This
chart averages the individually-indexed full-year gold performances
in those bull-market years from 2001 to 2012 and 2016 to 2018. 2019
isn’t included yet since it remains a work in progress. This
bull-market-seasonality methodology reveals that gold’s spring rally
is its last push higher before the summer doldrums arrive. While
this is gold’s smallest seasonal rally of the year, the gold stocks
greatly leverage it.
During these modern bull-market years from 2001 to 2012 and 2016 to
2018, gold’s spring rally tended to start in mid-March on
average. From that major seasonal low following the winter rally,
gold often starts grinding higher before its gains accelerate
through April and much of May. This spring rally has generally run
its course by late May. Across the 15 bull years in this study,
gold averaged modest spring rallies of 3.3%.
This
spring rally unfolds rapidly, with an average duration of just 2.2
months. That makes it the smallest and shortest of gold’s
three major seasonal rallies, falling way behind the champion 9.3%
winter rally that precedes it and the strong 5.7% autumn rally that
follows the
summer doldrums. Nevertheless, it is still well worth trading.
3.3% gains do really make a difference, and naturally about half of
years exceed this mean.
On
average gold’s spring-rally bottoming occurred on March’s 10th
trading day, which will be the 14th this year. If today’s seasonals
stay true to form, gold will slump in the first couple weeks of
March. But that seasonal pullback between the winter and spring
rallies is pretty modest, averaging just 1.3% over a few weeks at
most. The resulting mid-March lull in gold prices spawns an
excellent gold-stock buying opportunity.
Gold’s average seasonal performances in March, April, and May during
these modern bull-market years ran -0.3%, +1.6%, and +0.6%. While
even April is just gold’s 6th-best month of the year, it still has
an outsized impact on gold-stock prices. This has to be
sentiment-driven. Optimism runs high in the spring anyway, and
plenty of bullish psychology lingers following gold stocks’ strong
winter rally in preceding months.
This
year’s spring gold rally has excellent potential to come in on the
large side. Gold investment demand
surged in Q4’18
as global stock markets crumbled. They are likely rolling over into
a long-overdue
major bear. When investors start worrying its next major
downleg is brewing, they will again flood into gold to continue
diversifying their stock-heavy portfolios. Surging gold investment
demand propels gold strongly higher.
That
may push gold to the verge of a
major decisive
breakout to new bull highs! At best in February, gold
hit $1341 on close. Assuming a 1.3% early-March seasonal pullback
before a typical 3.3% spring rally, gold would hit $1367. That’s
just above its bull-to-date peak of $1365 seen way back in early
July 2016. Investor and speculator interest in gold, and capital
inflows into it, will explode as new bull highs are achieved.
And as goes gold,
so go gold stocks. Gold stocks also exhibit strong
seasonality, which is of course the direct result of gold’s own
seasonality. Since gold-mining costs are largely fixed when mines
are being planned, fluctuations in gold’s price flow directly into
amplified moves in gold-mining profits. Higher gold prices drive
much-higher earnings for the gold miners, which attract in more
investors to bid up stock prices.
The ironclad
historical relationship between the price of gold,
gold-mining
profitability, and therefore gold-stock price levels is
exceedingly important to understand. If you need to get up to
speed, I wrote an essay looking at gold-stock price levels
relative to gold
early last month. Fundamentally gold stocks are leveraged plays
on gold, and greatly outperform in the spring on gold’s
seasonals and general optimism.
This next chart
applies this same bull-market-seasonality methodology used on gold
directly to the gold stocks. It looks at the average annual indexed
performance in the flagship HUI NYSE Arca Gold BUGS Index in these
same bull-market years of 2001 to 2012 and 2016 to 2018. Using the
HUI is necessary because the popular GDX VanEck Vectors Gold Miners
ETF was only born in May 2006, missing bull years.
That was halfway
into the last secular gold-stock bull, which ran from November 2000
to September 2011. Over that long 10.8-year span, the HUI
skyrocketed a life-changing 1664.4% higher on gold’s parallel 638.2%
bull! Gold-stock prices naturally mirror and amplify gold
action since it dominates gold-mining earnings. That’s true across
entire secular bulls, within individual uplegs, and even in
calendar-year seasons.
Gold
stocks’ seasonal spring rally is much stronger than gold’s,
buttressing that spring-optimism-drives-stock-buying thesis.
Between mid-March and early June, the gold stocks have averaged
hefty 12.2% rallies in these 15 modern bull-market years. That
makes for exceptional 3.7x upside leverage to gold’s 3.3%
seasonal spring rally! Interestingly this is gold stocks’ best
seasonal leverage to gold’s gains by far.
While the HUI averaged 14.9% surges during gold’s winter rally, that
only made for 1.6x upside leverage to gold’s big 9.3% gain. And the
HUI’s 9.3% average gain during gold’s autumn rally also only
amplified gold’s 5.7% gain by 1.6x. So while the gold-stock spring
rally’s 12.2% average gains rank second out of these three seasonal
rallies, it offers the most bang for the buck in gold-stock upside
compared to gold!
Like
gold, the gold miners’ stocks suffer a seasonal slump from late
February to mid-March. That has averaged 2.7% in these modern
bull-market years. So don’t be worried into selling if we see a
typical early-March slump in this sector. That’s usually just a
mild pullback before gold stocks’ strong spring rally gets
underway. Any seasonal weakness is a great opportunity to add new
gold-stock trades relatively low.
The
gold stocks’ post-winter-rally pre-spring-rally lull tends to bottom
on March’s 11th trading day, which will be the 15th this year. From
there the HUI surges 12.2% higher on average over the next 2.7
months into early June. Interestingly the gold stocks tend to top
a couple weeks after gold peaks in late May. That’s likely
the result of momentum fueled by spring optimism and strong gains
since the prior summer.
Assuming this year’s gold-stock seasonals conform to their bull-year
precedent in coming months, some impressive levels are coming before
summer. If the HUI first retreats 2.7% from its February peak into
mid-March before powering 12.2% higher into early June, we are
looking at 193.0 heading into this year’s summer doldrums. Those
would be the best gold-stock levels since February 2018 on merely
normal seasonals.
But
this year’s spring seasonal rally has real potential to grow much
larger than usual. Of course if gold’s own spring rally becomes
outsized due to stock-market-selloff-driven surging gold investment
demand, the gold miners’ stocks will leverage those gains. And the
higher gold stocks climb, the more bullish their psychology.
Speculators and investors alike love chasing momentum and piling
into winning trades en masse.
More
importantly this sector’s strengthening fundamentals should
support bigger seasonal gains. Gold’s price averaged $1228 in
Q4’18. While the gold miners are still finishing reporting their
results for last quarter and full-year 2018, odds are their
collective all-in sustaining costs will remain flat. Every quarter
I wade through the latest results of the major gold miners of GDX,
and usually publish the Q4 ones in mid-March.
Over
the last four fully-reported quarters
ending in Q3’18,
the GDX gold miners averaged AISCs of $858, $884, $856, and $877.
That makes for an $869 mean, but let’s round that to $875 for easier
calculations. At Q4’s average gold price of $1228 and $875 AISCs,
the major gold miners of GDX and the HUI likely earned profits near
$353 per ounce last quarter. But so far in Q1, the average gold
price has surged to $1305!
With
AISCs this quarter likely to be stable too around that usual $875,
the gold miners are likely earning profits of $430 per ounce so far
in Q1. That is a massive 21.8% higher quarter-on-quarter! If
investors expect Q1’19 earnings to come in this strong, there’s no
way gold stocks will merely see a seasonally-average spring rally.
Strong operational results in both Q4 and Q1 reporting should fuel
a major gold-stock bid.
Seasonal spring rallies can balloon very large in rising-gold-price
environments, which drive excellent fundamentals for the gold
miners. The last example happened in spring 2016, when the HUI
powered 32.3% higher within its normal spring-rally span! That was
just a fraction of a monster 182.2% upleg that skyrocketed over just
6.5 months. Gold-stock buying is fast and furious when momentum
fuels enthusiasm.
This last chart
breaks down gold-stock seasonality into even-more-granular monthly
form. Each calendar month between 2001 to 2012 and 2016 to 2018 is
individually indexed to 100 as of the previous month’s final close,
then all like calendar months’ indexes are averaged together.
Slicing up seasonal tendencies this way shows May has actually
averaged gold stocks’ strongest month of the year in modern
bull-market years!
During the 15 Aprils in these modern gold bull-market years, the
gold stocks as measured by the HUI saw average gains of 1.6%. But
the lion’s share of the spring-rally gains came in May, where
average gains nearly tripled to 4.7%! For decades if not longer,
May has been one of the best and most-important months to be heavily
long gold miners’ stocks. Only February and November have managed
to rival it.
The
key to gold stocks’ spring rally is to get your capital deployed
by mid-March, when gold stocks swoon to their spring-rally
bottoming. In intra-month terms the initial gains are often fast in
late March as gold stocks rebound out of their seasonal lull. But
then the spring rally tends to slow down in mid-April, which
invariably discourages impatient and short-sighted traders. The
real gains come in May, when gold stocks surge.
Of course the
standard seasonality caveat applies that these are mere
tendencies, not primary drivers of gold or gold stocks.
Seasonal tailwinds can be easily drowned out by bearish sentiment,
technicals, and fundamentals. Seasonality doesn’t always work,
especially when it doesn’t align with the primary drivers of
sentiment, technicals, and fundamentals in that order. Thankfully
that certainly isn’t the case this year.
Gold-stock
sentiment is growing increasingly bullish as this sector’s
solid upleg
gathers steam. Seeing higher lows and higher highs on balance
further feeds into positive psychology, and traders love to chase
momentum in rallying sectors. Mounting stock-market fears of a
young bear getting underway should continue to
push gold
investment demand higher. The resulting higher gold prices
really boost mining profits.
Outsized
gold-stock gains during this spring-rally timeframe are fully
justified fundamentally when gold itself is rallying. When
sentiment, technicals, fundamentals, and seasonals all align behind
gold stocks, they often surge dramatically higher. Unfortunately
most speculators and investors won’t realize this until most of the
spring-rally gains have already been won. Buy low in mid-March
instead of buying high in early June!
While you can ride
gold stocks’ spring rally higher in GDX, the major miners dominating
it are struggling
to grow their production. Far-better gains will be won in
smaller mid-tier and junior gold miners with superior fundamentals.
The best are increasing their output through new mine builds and
expansions, which also lowers their costs further boosting their
profits. Their upside potential
utterly trounces
that of the GDX majors.
The
earlier you get deployed, the greater your gains will be. That’s
why the trading books in our popular
weekly and
monthly
newsletters are currently full of better gold and silver miners
mostly added in recent months. The gains we won in 2016 were
amazing the last time American stock investors returned to gold.
Our newsletter stock trades that year averaged +111.0% and +89.7%
annualized realized gains respectively!
The
gold-stock gains should get really big as today’s young gold and
gold-stock uplegs grow. The gold miners are
the last
undervalued sector in these still-expensive stock markets, and
rally with gold during stock-market bears unlike anything else. To
multiply your wealth in the stock markets you have to do your
homework and stay abreast, which our newsletters really help. They
explain what’s going on in the markets, why, and how to trade them
with specific stocks. You can
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for just $12 per issue!
The bottom line is
gold stocks often experience a strong spring rally seasonally. This
is driven by gold’s own seasonality, where outsized investment
demand arises at certain times during the calendar year. Gold
usually enjoys a solid spring rally likely driven by the universal
optimism this season brings. And since gold drives gold miners’
profitability, their stock prices naturally follow it higher while
amplifying its gains.
要約すると、金鉱株には強い春ラリーを起こしやすい季節性がある。この値動きはゴールド自身の季節性によるものだ、季節によって大きな投資需要が引き起こる。春には多くの人が楽観的になりゴールドはラリーを起こすことが多い。そしてゴールドが金鉱会社の利益を左右するため、株価もこれを増幅して上昇する。
要約すると、金鉱株には強い春ラリーを起こしやすい季節性がある。この値動きはゴールド自身の季節性によるものだ、季節によって大きな投資需要が引き起こる。春には多くの人が楽観的になりゴールドはラリーを起こすことが多い。そしてゴールドが金鉱会社の利益を左右するため、株価もこれを増幅して上昇する。
今年の春ラリーが始まるのは3月半ばだ、通常よりも大きくなる可能性がある。金鉱株心理は徐々に改善している、というのもこのセクターが徐々に上昇しているからだ。そして株式市場下落懸念にともなう新規投資需要によりゴールド価格が上昇するにつれ、金鉱会社利益を加速させる。これらのことが相まり強い季節性の追い風となり、大きな春ラリーを引き起こすはずだ。
Adam Hamilton, CPA March 1, 2019 Subscribe