The Strongest Seasonal Advance in Precious Metals Begins Now

Plans and Consequences

You are probably already getting into the holiday spirit, perhaps you are even under a little stress. But the turn of the year will soon be here – an occasion to review the past year and make plans for the new one. Many people are doing just that – and their behavior is creating the strongest seasonal rally in the precious metals markets.

Silver is seasonally cheap in mid December

First let us look at the seasonal chart of silver.

The chart shows the average moves in silver prices in the course of a calendar year over the past 69 years. The horizontal axis shows the time of the year, the vertical axis depicts price information.

With the help of this chart, seasonal trends can be identified at a glance. Note: the seasonal pattern does not end at the turn of the year, but actually continues at the beginning of the year (i.e., on the left hand side of the chart).

As the chart illustrates, on average silver tends to post the by far strongest price gains early in the year until peaking close to the end of February. This rapid advance actually begins in mid December (blue arrow). Thereafter the price typically retreats again.

Thus silver makes a move in excess of its total annual seasonal gain over the coming two months!

The seasonal rally is caused by fundamental drivers

The strong seasonal advance is very likely driven by purchases from the manufacturing industry. Many industrial silver processors/users place the bulk of their purchase orders at the beginning of the new financial year once annual planning has been completed and new orders can be booked.

If you purchase silver ahead of this phase – to be precise, in mid December – you will buy at a fairly reasonable price from a seasonal perspective and stand to benefit from the strong seasonal rally.

Silver Spot - Seasonal

- Click to enlarge

Silver price, seasonal pattern over the past 69 years. Silver prices typically rise very strongly until the end of February

Platinum prices offer a seasonally favorable entry in mid December as well

But what is the situation with other precious metals? Next I will show you the typical seasonal pattern of platinum over the past 32 years.

As the chart shows, platinum exhibits a very similar seasonal pattern. Just as silver, it rises strongly from mid December almost to the end of February.

Contrary to silver, platinum displays a further seasonal advance in April, but subsequently these gains tend to be retraced almost in their entirety.

In light of the fact that similar to silver, the seasonal rally in platinum is associated with the turn of the year, it is probably attributable to the same fundamental reason: purchases related to the new financial year.

Platinum Spot - Seasonal

- Click to enlarge

Platinum price, seasonal pattern over the past 32 years.
Platinum also tends to rally strongly starting in mid December