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Dark clouds for equities in Sept. may be silver lining for gold, silver bulls

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(Kitco News) - CNBC’s “Pro Playbook” email dispatch on Thursday said: “August was rough for Wall Street, and September could be more of the same. Data compiled by the Stock Trader’s Almanac shows September is on average the worst month for stocks.

Since 1950, the S&P 500 has averaged a loss of 0.5% in September, including a drop of 11.9% in 1974. The benchmark index has also posted September losses in the last two years, dropping 4.8% in 2021 and 3.9% in 2020. This historically weak performance for the month, along with August’s declines and expectations of even higher rates from the Federal Reserve and other central banks, raise concern over a potential retest of the mid-June lows” in the stock indexes.

The above scenario may be what puts in price bottoms in for the gold and silver markets. Gold hit a six-week low Thursday and silver a more-than-two-year low.

The metals markets (hard assets) and the stock market (paper assets) compete for trader and investor monies, and the turbulent months of September and October for the stock and financial markets may be just what the doctor ordered for the safe-haven gold and silver markets.

It can also be argued that the hawkish central banks and notions of weaker global economic growth that are likely to crimp consumer and commercial demand for metals, has now been factored into gold and silver prices.

Don’t be surprised if a “sell the rumor, buy the fact” scenario develops in the gold and silver markets in the near term, regarding the bearish central bank element for the metals.

Also, from a short-term technical perspective, the gold and silver markets are oversold, technically, and due for corrective bounces very soon.

The risk of gold price plunging below $1,700 is limited, says Standard Chartered

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.