Chief Investment Strategist, The Freeport Society
There’s never a wrong time to buy gold.
It’s a cornerstone position in the Freeport Investor model portfolio as a hedge against the Three D’s of debt, deficits, and dollar debasement.
And I’m happy to report it’s doing a great job of protecting subscribers’ buying power.
Our recommended gold position is up 65% versus the dollar since we launched the Freeport Society in December 2023.
Given the lack of any serious attempt to rein in the debt or deficits, I expect those gains to keep rolling in.
But as we’ll look at today, gold goes through regular seasonal cycles each year. That makes some times better than others to be a gold buyer.
And we’ve just entered one of the best times of the year for a particular kind of gold trade.
First, it’s important that you understand the three different functions gold can play as part of your wealth building – and wealth preservation – efforts.
The Three Reasons to Own Gold
The first type of gold is what I call Insurance Gold.
This is gold you keep in case things really turn south.
You shouldn’t consider this an investment… or even as part of your net worth. This is gold you never plan to sell. Instead, you stash it away in a safe or lockbox, along with cash and a handgun (for when society breaks down or war breaks out or something equally awful happens).
I hold my Insurance Gold in the form of 1-ounce American Eagle coins.
These aren’t rare – or numismatic – coins that are sought after for their age, historical significance, condition, and collector demand. Such coins carry a hefty premium over the quoted price of gold.
My American Eagles are known as bullion coins. These are coins primarily bought for their precious metal content and whose value is closely tied to the quoted price of gold plus a small premium.
The second type is Portfolio Gold.
This is the gold you hold alongside your stocks and bonds in your portfolio. Holding Portfolio Gold by way of a gold-backed exchange-traded (ETF) is fine.
Every investor is different. You’ll want to decide on your own allocation. But I consider 5% to 10% of a portfolio to be about right.
Treat this gold just like any other asset allocation in your portfolio. Actively rebalance once or twice a year to maintain your target allocation. That means making sure you don’t become too focused on investments in one particular sector. Rather, you want to make sure you’re staying within your risk tolerance.
The final type is Speculative Gold.
This is for the actively traded part of your portfolio. Consider this the same bucket of money you would use for a hot stock tip.
This last type is our focus today. As I mentioned up top, that’s because of a bullish window that just opened up for trading the precious metal.
The Best Time of Year to Buy Gold
Using the Seasonality tool developed by the folks at TradeSmith, I’ve found an ideal window to buy gold via the Sprott Physical Gold Trust (PHYS).
As you can see from the chart below, over the past 15 years, PHYS has enjoyed average returns of 2.3% in the July 25 to August 10 window with 80% accuracy.
That may not sound like a lot. But if you repeated that gain over the course of a year, it works out to a 76% return.
PHYS is similar to the SPDR Mini Gold Shares (GLDM) we hold in Freeport Investor and the more popular SPDR Gold Trust (GLD)
It’s a fund that owns gold bars in vaults on behalf of investors.
The key difference is that your gains in PHYS are generally taxed as capital gains, whereas your gains in GLDM and GLD are generally taxed at a higher collectibles tax rate.
For a long-term position you have no intention of selling, that may be irrelevant. But for a shorter-term trade, it can make a difference.
And you have a little wiggle room on this trade, as the bullish seasonal window (green shaded areas on the chart above) remains broadly favorable through September 1.
So, if the trade is performing well and you’re willing to watch it closely, you can let this one run until then. Just be sure you’re watching it closely.
This is the beauty of TradeSmith’s tool, by the way. Rather than tell you exactly what to do, it gives you the tools to make more informed trading decisions.
83% Success Rate
This is just one example of the profit opportunities TradeSmith’s Seasonality tool has uncovered.
There are plenty more, hidden beneath the surface – in other commodities, currencies, crypto, and stocks.
That’s why the folks at TradeSmith are giving you and your fellow Freeport Navigator readers access to their seasonality charts to see what cycles are hiding in your favorite stocks.
They’ve found stocks that follow their seasonal trends so consistently that you could’ve traded them for three decades straight and ended up with an 83% success rate.
And by leveraging the power of this tool through options, TradeSmith subscribers have had the chance to close out the following gains…
- 107% on Aon (AON) calls in 23 days
- 112% on Hasbro (HAS) calls in 10 days
- 124% on Booking Holdings (BKNG) calls in 15 days
- 180% on Analog Devices (ADI) calls in 14 days
- 248% on Intuit (INTU) calls in 15 days
To check out how it works… and how to access your seasonality charts… head on over here now.
To life, liberty and the pursuit of wealth.