This 20 Year Cycle Suggests Gold is Set for an August Rally

Jul 31, 2020

Apurva Sheth, Editor,Profit Hunter Pro

I found my soulmate in June 2018 and we decided to enter wedlock in December 2018.

Our excitement and nervousness increased as the wedding date came closer. Apart from the wedding related anxiety there was something else which worried me the most.

It was gold.

It had started trading above Rs 32,000 /10 gms by October 2018. It was trading above this level for first time in two years.

I knew that the prices of gold would rocket. So, I had to act quickly and shop for gold before that happened. Luckily, I bought it on time.

But I wasn't alone. I had also told my readers to buy gold.

I predicted it would be the best asset class to invest in 2019. I wrote a total of 21 editorials by end of 2019 to my readers reminding them about this opportunity in gold.

Gold ended the year 2019 with gains of 24.58%.

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But we were not done yet. Something happened in March and April 2020 which amplified the uptrend in gold.

The US Fed had started cutting interest rates to support the US economy in July 2019.

But after the coronavirus struck hard in March, the interest rates were slashed to 0.25% from 1.75% in just a fortnight.

The Fed cut rates in the year 2000 and 2008 to support the economy. Gold witnessed a rally of 51% and 76% respectively within three years of this signal.

But in 2008 the Fed also resorted to Quantitative Easing or QE.

They printed money to buy bonds of banks and financial institutions. Fed did a total of four rounds of QE. The first round of QE began on November 25, 2008. Three years later gold had moved up by 114%.

So, when the Fed starts to aid the economy, that's your signal to buy gold.

On April 9, the Fed announced biggest ever bond buying program of US$ 2.3 trillion.

Fed Chair Jerome Powell said the central bank would "do whatever it takes" to support the economy. This means unlimited QE.

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That's your latest signal to buy gold.

International gold prices have already rallied by about 20% since the rate cut in March 2020. Gold has rallied almost 10% in July so far. That's a sharp rise by any standard.

But if you are thinking that gold won't rally anymore next month then you must look at this chart.

This is the August month performance of international gold prices for the last 20 years. If history is anything to go by, then August is the month to hold gold rather than to exit.

International gold prices moved up in 15 out of the last 20 years. That's a success ratio of 75%. The average monthly gains of gold in August is 2.84% over the last 20 years.

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The month of August has stood the test of time on a longer time frame too. If you were to buy and hold gold for the month of August then you would have made money 65% of the time over the last 40-years.

The performance of gold has improved over shorter time frames. The monthly gains of gold in August is highest across months at 3.8% over last 10 years. Gold has ended on a positive note in 8 out of last 10 years.

So, history suggests gold is set for a rally this August. Hold on and enjoy the ride.

It is intriguing that the past has so much insight for people who know where and how to look for it.

Gold is just one example of a pattern which is obvious. Yet not many know about it and even fewer will actually tell you about such hidden patterns.

I have been tracking several patterns like the one you just saw above.

I believe, these hidden patterns have solid potential.

I would like to reveal several other hidden patterns to you but before I do that, I would like to know whether you are interested in knowing more about them.

Would you like to know more about these patterns?

Share your thoughts and views about such hidden patterns. Have you seen similar patterns in stocks or commodity?

I'd like to hear from you.

Let me know here.

Warm regards,

Apurva Sheth
Senior Research Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

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