Earnings Season

What is the most important season? Most people prefer summer as one can swim and sip drinks on the beach shirtless. Personally, I like winter when the earth is covered by snow and you can ski then and drink tea with rum without causing strange looks. Spring and fall have their own charms, but the most important season for the Wall Street is earnings season!

There are four of these throughout the year, and each covers several-week period, specifically from early January to early February, from early April to early May, from early July to early August, and from early October to early November. This is when the vast majority of the nation’s corporations report their quarterly sales and earnings. The timing results from the fact that the majority of companies are on a calendar fiscal basis for reporting purposes and they issue reports from two (Alcoa is one of the first major companies to release earnings) to five weeks after the each quarter ends.

Earnings Season and Gold
What does the earnings season mean for investors? Well, this is for sure a very active time for market participants who review the earnings reports, which may affect their stance on a given company. This applies also for people who invest in gold and silver mining stocks. The earnings reports can confirm or invalidate the expectations of analysts and investors, exerting important influence on the stock prices.

When it comes to gold, it’s hard to spot any link between the earning seasons and gold prices. The chart below shows gold prices in 2019. We marked the earnings seasons by yellow rectangles. As one can see, the yellow metal behaved differently in these periods, without any visible patterns. 

Chart 1: Gold prices (London P.M. Fix, $) in 2019

Gold prices 2019 chart

Of course, these are just a few observations, but we have chosen to do it because of clarity. But the point is that idiosyncratic results should not generally impact the gold market significantly, as the results published by particular companies should cancel out: some of them are always bearish, while other are bullish. But when majority of results are above or below expectations, then we could see some impact on the gold prices.

However, it’s not easy to determine the particular effect, as the correlation between the stock market and the precious metals market is constantly changing. Sometimes, these two markets move in tandem, while sometimes gold’s role as a safe-haven asset dominates and bullion moves in the opposite direction to equities!