Indicator of the Week: Should You Hold Stocks or Gold in March?

How the S&P 500 Index (SPX) -- and gold -- tend to fare in the month ahead

by Rocky White

Published on Mar 4, 2015 at 8:10 AM
Updated on Apr 20, 2015 at 5:32 PM

February marked the biggest single-month return for the S&P 500 Index (SPX) since October 2011. This week, I'm taking a look at seasonality trends for March to see what the chances are of more gains.

The table below shows monthly return stats for the SPX since 1975. We are heading into what has historically been a pretty bullish part of the year. The two-month time frame of March-April has averaged a gain of 3.04% -- which is the second best two-month period return behind November-December, with a 3.16% gain.

S&P 500 Since 1975

Strong February = Strong March: Considering that February was just the best month in over three years for the SPX, with a gain of 5.5%, the table below is promising. It shows how March has performed depending on how February turned out. Each column, moving from left to right in the table, summarizes March returns following better and better Februaries. As February becomes stronger, so does March. From the last column in the table, there have only been four other times that February has gained at least 5%. Each time, March has been positive, averaging further gains of 3.67%.

S&P 500 March Returns since 1975

Gold Seasonality: We're heading into a bullish time for stocks, but that's not the case with gold by any means. Below I show the monthly returns for gold since 1975. In the month of March, gold has averaged a loss of 0.88%, with only 38% of those returns positive. By those two measures, it's the worst month of the year for gold.

Monthly Gold Returns since 1975

Starting in 2001, the metal notched 12 straight years of gains before tumbling over 25% in 2013, and then staying roughly flat in 2014. Despite the last couple of years, gold has a double-digit annualized return since 2001 (about 11% per year). It has been a completely different environment since 2001 for gold, which was a perpetual underperformer in the years prior. However, one thing that's remained consistent from those underperforming years is that March is a terrible month for gold. In March, the metal has averaged a loss of 0.56% -- even in these post-2001 boom times -- and has been positive a paltry 36% of the time. If history is our guide, then it's clear: Hold stocks for the next month, and not gold.

Monthly Gold Returns since 2001

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Stocks Surge During Holiday-Shortened Week
Stocks chugged higher as the government responded to the coronavirus crisis with more funding
Bank Stocks Ease Investors Back Into Earnings Season
Bank stocks will kick off earnings season next week
The Top Lithium Play of 2020
Click to continue to advertiser's site.