A few interesting charts from Europe's MoneyWeek...

Regards - VHF

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Gold: is this drop a normal seasonal correction? Or something worse?

Dominic Frisby - MoneyWeek

October 17, 2012

...The good news is that gold has a habit of doing rather well following US election years.

Below, we see gold since 1970 with red arrows marking each of the 10 post-election years during that period - 1973, 1977, 1981, 1985, 1989, 1993, 1997, 2001, 2005 and 2009.

(Click on the chart for a larger version)

Gold rose in all but three of them - 1981, 1989 and 1997. Given that those 40 years include 20 years of bear market, that's a pretty impressive statistic.

I only have charts for the XAU (gold stocks index) going back to 1984. But the gold stocks in this period did even better than gold in post-election years, as you can see below. Gold stocks fell in just one (1997) of the past seven post-election years.

In 1989 when gold was pretty much flat on the year - though with hefty declines in the middle - the XAU ended the year over 50% higher.

(Click on the chart for a larger version)

So, while the period between now and the election might be decidedly rocky, it all looks very good for 2013. I'm confident both gold and gold shares will have long since broken out to new highs 15 months from now.