The Price of Gold Just Bottomed

In the past few years, we have seen some strange activity in the gold price at the end of the year.

It may have just happened again.

If so, you need to read this…

A Blow-Off Period for the Gold Price

The gold price has had a rough past few months:


It traded above $2,000 an ounce in August for the first time ever. But it couldn’t maintain its momentum.

And that’s really not a surprise, because gold tends to drop at the end of the year.

In each of the past five years, the gold price has bottomed in November or December — as early as November 12 in 2018, and as late as December 22 two years before that.

The fourth quarter has served as a blow-off period for the gold price.

Then it regroups … and rises.

And once it rises, it makes some solid moves. Take a look:

Price of Gold December 2015-2020

(Source: Bloomberg, internal calculations.)

There are some important takeaways to glean from this chart.

First, the gold price is on the rise.

It has traded higher each year except for one. It’s up more than 70% from its low five years ago.

Next, the gold price has risen a lot each year in the months that followed its bottom.

The max first-quarter price occurred as early as January 24 in 2018, and as late as March 10 in 2016.

This means that over the past five years, gold has risen an average of nearly 14% from its bottom. It has happened in as little as 44 days (from 2017’s bottom) and as many as 103 (from 2019’s bottom).

And we just observed a potential bottom in the gold price on Monday this week.

After closing below $1,800 an ounce last Friday and again on Monday, gold popped higher. It’s following the script from the past few years.

If past is protocol and this is the bottom, you should expect to see the gold price rise double digits over the next few months.

How to Ratchet up Your Returns

GDX US Equity Prices 2020

(Source: Bloomberg, internal calculations.)

This table shows the price of the VanEck Vectors Gold Miners ETF (NYSE: GDX). It is a leveraged way to play the increase in the gold price.

The exchange-traded fund (ETF) owns 52 of the largest gold miners and royalty plays in the world. Newmont Corp. (NYSE: NEM) is its largest position.

When the gold price increases, it normally rises more. Over the past five years, GDX has risen an average of 24% between the fourth-quarter bottom in the gold price and its subsequent peak.

Or, if you’re feeling aggressive, you could buy into junior miners:

GDXJ US Equity Prices 2020

(Source: Bloomberg, internal calculations.)

The VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) owns more names than GDX. It has generated an average return of 28% during the last five years.

There is some overlap in the holdings with GDX. But GDXJ generates greater returns by making less-concentrated bets. It also owns some names that are smaller and more volatile.

I should also note that last year was an off year for the ETFs. Gold outperformed both GDX and GDXJ.

December Should Be a Good Month for Gold

In the past, we’ve seen gold perform well at this time of the year. Expect that to happen again this year.

Government money printing is good for the gold price. Federal Reserve Chairman Jerome Powell just confirmed this week that his group’s response to the pandemic will be to “use our tools until the danger is well and truly past.”

Powell again said this of support from Congress: “The risk of overdoing it is less than the risk of underdoing it.”

That’s good for gold.

Over the past five years, you could generate a 14% return in about three months just by going long.

And if you’re looking to add some leverage, GDX and GDXJ generally outperform the yellow metal.

Good investing,

Brian Christopher

Editor, Profit Line

Previous Post
Next Post



Very interesting! They stare vacuously so that someone will buy them. Shandie Dante Marquet


Hi there. I found your blog by the use of Google at the same time as searching for a related subject, your site got here up. It appears to be good. I have bookmarked it in my google bookmarks to come back then. Pegeen Ignacio Danit


Great blog here! Also your website loads up fast! What host are you using? Mirelle Jeffy Noland


Great work! This sounds like the software I was looking for for quite a while now. Ellynn Muffin Godart

movie online

Hey there. I found your site by the use of Google whilst looking for a similar subject, your site came up. It looks good. I have bookmarked it in my google bookmarks to visit then. Vera Ted Saul


Great blog here! Also your site loads up fast! What web host are you using? Can I get your affiliate link to your host? I wish my web site loaded up as fast as yours lol Arielle Torry Squires

game of thrones

I loved your article post. Thanks Again. Keep writing. Elli Justin Castillo


PREDIKSI SYAIR JITU Sydney Selasa, 21 Januari 2020 Lilia Maury Moia


Hi there, I do think your site may be having internet browser compatibility problems. When I take a look at your web site in Safari, it looks fine but when opening in IE, it has some overlapping issues. I just wanted to provide you with a quick heads up! Aside from that, great site! Odelinda Alwyn Patterson


Very nice post. I just stumbled upon your blog and wished to say that I have really enjoyed browsing your blog posts. In any case I will be subscribing to your rss feed and I hope you write again soon! Gwyneth Guthrie Augusto

hindi movie

A round of applause for your blog article. Really looking forward to read more. Really Cool. Layney Quent Robbin

hindi movie

We have an enormous free DVD selection that you could download or stream. Bernice Ody Lunn


I would like to thank you for the efforts you have put in writing this web site. I am hoping the same high-grade website post from you in the upcoming also. In fact your creative writing abilities has encouraged me to get my own web site now. Actually the blogging is spreading its wings fast. Your write up is a good example of it. Jeannette Filberte Alain


Thank you for sharing your thoughts. I truly appreciate your efforts and I will be waiting for your next post thank you once again. Eryn Hilary Damarra


thank you very much. Encouragement accepted graciously Mirabelle Karim Teryl


Pretty! This was an extremely wonderful article. Thank you for providing these details. Aggi Robinet Goto


There is definately a great deal to find out about this subject. I like all the points you have made. Shayla Brice Arthur


Keep up the good piece of work, I read few blog posts on this website and I believe that your site is very interesting and has lots of excellent info. Floris Abran Kuhn

Excellent blog right here! Additionally your website rather a
lot up fast! What host are you the use of? Can I am getting your affiliate link for your host?
I desire my web site loaded up as quickly as yours lol

appropriate article, i love it

storno brzinol

Very interesting information!Perfect just what I was looking for!

Leave a Reply

Your email address will not be published.