September is usually a great month for gold and silver prices

The buying season is upon us for gold although August was a poor month for bullion sales at the major mints. The chart below from Bloomberg shows an average gain of 2.3 per cent in the gold price in September since 1969. It’s what Wall Street veteran and gold author Frank Holmes describes as the ‘love trade’ with the cultural and religious links many Asians have for gold coming to a seasonal peak.
Mr. Holmes told The Daily Reckoning: ‘Indians will be getting ready for their wedding season that begins in October, followed by the five-day Hindu festival of lights, Diwali, which is India’s biggest and most important holiday of the year. ‘In December, millions of people will be gathering with loved ones to exchange gifts as they observe Christmas. And finally, millions will celebrate Chinese New Year at the end of January 2014.’
India’s monsoon season has been good boosting farmers’ incomes and the likelihood they’ll buy gold even after government taxes have been raised to 10 per cent this year. In 2010, the last year that rains were this high demand was up 37 per cent in the fourth quarter after harvests, although then gold prices were also on a tear and not a correction.
Still don’t forget, gold has just hit a record price in rupees due to devaluation and that is the farmers main reference point. Will they still buy or shun high prices? Well they still bought in 2010.
Rupee gold price high
Mr. Holmes is not worried by the high price of gold in Indian rupees that he sees as a ‘possible short-term threat… Keep in mind the East’s long-term sentiment toward the metal, as this area of the world has a different relationship related to both the love trade and the fear trade. And it’s not easily broken.’
Will this year break the seasonal uplift in gold prices usually due in September. Goldman Sachs has depressed the precious metal over the past couple of days with its gloomy view on prices.
Then again they did not see 2008 coming and ended up being taken to the cleaners by Warren Buffett. Nobody gets it right all the time! Goldman has banked its future again on an ever expanding US economy. Silver is the leveraged play on gold and usually outperforms when prices go up.

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