The Golden Days of Summer

By Rick Pendergraft
It doesn't make much sense that a hard commodity would follow a seasonal pattern, but the ultimate hard commodity does just that. For a number of years now, gold has bottomed out during the summer doldrums and then rallied sharply.

Last year [in 2007], gold bottomed at the end of June around the $640 level before rocketing to $1,000 per ounce in March. In 2006, gold hit bottom in mid-June and then rallied more than $150 an ounce. In 2005, gold bottomed in early July at $420 an ounce before shooting up to $720 an ounce in May '06.

This summer could present the same scenario we saw last summer [in 2007] when gold pulled back to the 50-week moving average in June and then went on a tear. Right now [in 2008], gold is in the midst of a pullback, and the 50-week moving average is within reach in the $815 range.

To take advantage of this pattern, you can buy futures on gold. If you are not comfortable trading futures, you can buy an exchange traded fund (ETF) that will rise with the price of gold. The SPDR® Gold Shares (GLD) is the best ETF for tracking gold itself.

It might not be time for this trade yet, but as the days get hotter, so does gold.

[Ed. Note: Making money with your investments doesn't have to be risky or difficult. Though this article was originally published in June 2008, it is still pertinent today.]
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This article appears courtesy of Early to Rise [Issue #2375, 06-06-08], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com/.