Good Odds: Go Long Gold At Close Today (Wed), Exit At Close Before Thanksgiving

I like to look for historical patterns around days where the manipulation may be rampant and last night I looked at Thanksgiving. I was expecting to see a pattern of using the lightly traded Friday session to turn the price down. I didn't see much of a pattern there. I did see a nice pattern on the week leading up to Thanksgiving.

So, to be methodical, here's a dead-simple trading system:

• Buy gold at the stock market close during the week before Thanksgiving.
• Exit at the stock market close of the Wed before Thanksgiving.

Here's the results (one row for each of the different entry days):

Its pretty rare to see something like rows 33, 34, 35 and 36 where for each of six years in a row you get a tradeable bump up where all the trades are decent winners.

I also see that something extraordinary happened on Friday before Thanksgiving 2008 with gold rising 8% in one day. Looking back at the charts I see that was the short-term pop off a bottom during the 2008 panic. The S&P500 jumped something like 15% during those days. I've excluded 2008 from the average results because its such an out-lier.

This kind of trade looks pretty attractive to me. I have already opened a position for just this short-term trade.

By the way, the results for the S&P 500 are also attractive (but not as attractive as for Gold) either in average returns or percentage winners. Silver's results are attractive but without the consistency of gold and without a higher average return. So, gold is the place for me for this short-term trade. I have taken all my protective shorts off (copper and S&P500). I expect I'll revert to a smaller long-gold/short copper trade next week, but until them this long gold is the only short-term trade for me.

Of course, past results are no sure predictor of what will happen so everyone thinking about this has to do their own due diligence and manage their risk appropriately.

MontyHigh, www.worldofwallstreet.us

Comments

[Kevin]

And on the 7th year the correlation rested.

I love patterns like this and appreciate the post, but wonder if the past is any guide to what we are going to see in the next couple years...

Actually if we lose another 2%, on top of today's 3% loss, between now and Wednesday, you won't have to throw out 2008 to make your average 3% for all seven years. It's a tough market out there.