Gold prices in 2010-2011

[Sparky]

I thought I'd share some statistics with my pals here at GSUS.

As we know, the gold price has seasonal biases, with lows in the summer. As such, a gold "year" runs from 1 July until 30 June, so we have just completed the 2009-2010 gold year.

I took a look at the performance of gold in the nine years of this gold bull by comparing high and low prices from one year to the next. I make five comparisons:

1) How did the current year low compare to the previous year low?
2) How did the current year high compare to the previous year high?
3) How did the current year low compare to the previous year high?
4) How did the current year high compare to the previous year low?
5) What was the spread between the low and high of the current year?

I also looked at the dates on which the low and high occurred. (Note: I used the daily PM London fix price, as it is most readily available) I then computed an average of the annual statistics over the nine years to see what "typical" year-to-year changes look like.

Here's a summary table with the column headers numbered to correspond to the 5 annual changes listed above:

Year Low Date Price High Date Price [1] [2] [3] [4] [5]
2001-02 7/6/2001 $265 5/29/2001 $327 23.4%
2002-03 8/1/2002 $302 2/5/2003 $382 14.0% 16.8% -7.6% 44.2% 26.5%
2003-04 7/17/2003 $343 4/1/2004 $427 13.6% 11.8% -10.2% 41.4% 24.5%
2004-05 7/29/2004 $387 12/2/2004 $454 12.8% 6.3% -9.4% 32.4% 17.3%
2005-06 7/15/2005 $418 5/12/2006 $725 8.0% 59.7% -7.9% 87.3% 73.4%
2006-07 10/6/2006 $561 4/20/2007 $691 34.2% -4.7% -22.6% 65.3% 23.2%
2007-08 7/6/2007 $649 3/18/2008 $1,011 15.7% 46.3% -6.1% 80.2% 55.8%
2008-09 10/24/2008 $712 2/20/2009 $989 9.7% -2.2% -29.6% 52.4% 38.9%
2009-10 7/13/2009 $908 6/28/2010 $1,261 27.5% 27.5% -8.2% 77.1% 38.9%

Average 16.9% 20.2% -12.7% 60.0% 37.3%

[Sparky]

OK, a few more comments from the table. Using these annual changes, we can get a rough range of what to expect for the upcoming year, based on last year's low of $908 and high of $1261.

Starting with the average changes and looking at the two estimates for lows, we would expect the low value for the upcoming year to be in the range of $1061-$1101. If this were to match the worst year for gold in the bull run, the low would be in the $888-$981 range. If this were to match the best year, the low would be in the $1184-$1218 range. (The high value low is still possible, since the London fixed price today was $1234 before the plunge.) Notice that all but two of the lows occurred from July 1 - August 1. The other two occurred during October price collapses.

The average changes yield a high price range of $1453-$1516. Matching the worst year would yield a high of $1202 (which has already been surpassed on Day 1 of the new year!). Matching the best year would yield a high ranging from $1574-$2014. Notice that pinning down the timing of the high is much higher, as it has occurred from early December through late June.

My guess for the year? For a low price, I think support is firm enough to keep the bottom a little above the "average" range, around $1120. For a high, I think we'll be a little below the average range, probably around $1420.

[k-os]

Thanks, Sparky! I am not a buyer or a seller at the moment, but that's a well thought out analysis.

[Liquid]

Great post Sparky! Thanks for sharing, and taking the time of this..

I can't' buy right now either, but if I could, I would watch for a smackdown in the next few weeks. Very interesting that July is the month for lows...odd coincidence, or intentional rigging. Pretty obvious.

[gunDriller]

it'll be interesting to see the background news that goes along with the rise to $1400 and higher prices.

some of it is financial, like the Chinese up-valuing the Yuan 40%. so for them, gold at $1200 is like gold $1680 - in terms of the cost in Yuan.

as far as news about US government printing money, they only had one announcement, they announced the printing of $300 Billion last March 2009, I think that was to try to "re-assure" the markets. But most of their money-printing has not been announced so publicly.

i don't think the impact of the Gulf disaster has been factored into the economy or the price of gold yet. i think it will result in the evacuation of a percentage of the Gulf, 1 to 5%, and a similarly sized shutdown of that part of the economy.

i don't know how that will affect the gold price.