You are undoubtedly aware of one or another stock market anomaly, such as e.g. the frequent weakness in stock markets in the summer months, which the well-known saying “sell in May and go away” refers to. Apart from such widely known anomalies, there are many others though, which most investors have never heard of. These anomalies can be particularly interesting and profitable for investors – and there are several in the precious metals sector as well. Today I am going to introduce one of those to you.
Gold investors dead asleep for days?
To this end I am going to examine the performance of gold and gold stocks broken down by days of the week.
The first chart shows the annualized performance of the gold price in USD terms since 2000 (black bar), as well as the annualized gain generated on individual days of the week (blue bars).
I have measured the returns based on closing prices, thus the performance achieved on Tuesday equals the average percentage change between the close of trading on Monday and the close on Tuesday.
Gold, performance by days of the week, 2000 to 2017
Friday stands out markedly. Source: Seasonax
As the chart illustrates, one day really stands out: Friday. With an annualized return of 7.50 percent it reflects almost the entire annualized gain of 8.84 percent generated by the gold price over the time period under review.
By contrast, almost nothing noteworthy happened in the gold market from Monday to Tuesday. On Tuesday prices even declined slightly on average.
The difference – which has been measured over a period of no less than 4,585 trading days – is obviously quite significant. This suggests that these patterns are not a coincidence.
Gold investors indeed appear to be mired in deep sleep from Monday to Tuesday, or at the very least they are showing very little enthusiasm on these days.
The days of the week under the magnifying glass
What exactly was the trend in this pattern over time? The next illustration shows the indexed performance of gold since the turn of the millennium in gold color, as well as that of individual days of the week in other colors.
