The past few months have added some cred to the “sell in May and go away” rule of thumb for precious metals, as gold’s price action has been both boring and depressing. It’s now close to its 12-month low and a lot of mining stocks are providing material for the old joke: “Want to make a small fortune in gold mining stocks? Start with a large fortune…”

But, to paraphrase one more aphorism, the cure for low prices is … low prices. The further gold falls, the more pessimistic futures speculators become, to the point that they’re now close to being net short, something that hardly ever happens. On the following chart the speculators are represented by the silver bars and “commercial” traders (who tend to be right at big turning points) are red. Both groups are trending towards the “neutral” mid-point of the chart, which in the past has preceded big up moves in gold’s price.

Meanwhile, seasonality continues its slow but steady march out of the summer doldrums and towards what is usually a much stronger winter and spring. The following chart shows what happened towards the end of each of the past five years, as Chinese and Indians loaded up on gold for Spring/Summer wedding gifts and as savings for post-harvest cash. There’s no reason to expect them behave differently next time around.

Meanwhile, China continues to suck in more of the West’s gold each year…

… while Russia has begun using the metal to make a make a geopolitical point:

Analyst: Russia Buying Gold to Thwart Dollar ‘Blackmail’

(NewsMax) – Russia is buying up gold while liquidating U.S. Treasury securities to avoid “political blackmail,” according to a precious metals market analyst.

“This is also a kind of political declaration, stating that countries which have too many dollars can become the object of political blackmail,” the expert, Munich-based Dimitri Speck told the Russian-owned news agency Sputnik, according to another country-run media outlet, RT.com. “Russia is in a situation where it faces political sanctions from the U.S. in particular, and the West in general and thus has good reason to play it safe and bet on gold.”

The country’s gold holdings have quadrupled over the past 10 years, with Bank of Russia data showing the totals are approaching 2,000 tons and representing 17 percent of Russia’s total foreign reserves.