September: A Winning Month for Gold

When the stock market suffers gold often shines. So precious metals investors can look with anticipation to the month of September, long considered the worst month of the year for the stock market.

The Dow Jones Industrial Average typically declines in September, a phenomenon known as the “September Effect,” with an average decline since 1950 of about 0.8 percent, according to the Stock Trader’s Almanac. Included in that time span are some catastrophic drops, including crashes in 2008, as the global financial crisis unnerved investors, and 2001, following the 9/11 terrorist attacks.

In contrast, history shows that gold typically scores its second-biggest gain of the year during September, with a median increase of 1.6 percent and an average of 1.3 percent based on gold price performance over the last four decades, according to the World Gold Council. The statistical confidence level of gold’s positive performance is particularly high, at 90 percent. (The strongest month for gold performance over the past four decades is January when many investors put their money to work for the new year.)

Source: World Gold Council

Investment activity usually picks up in September, following the relatively slow summer months. At the same time, global demand for gold typically increases in September in preparation for the Indian wedding season and festivals during October and early November when it is traditional to give gifts of gold.