The gold miners’ stocks have drifted lower over the past month, slumping back to major support. This weakness has naturally intensified the bearish psychology engulfing this small contrarian sector, traders want nothing to do with it. Yet summers typically see gold and its miners’ stocks meander sideways to lower. These summer doldrums spawn the best seasonal buying opportunities of the year in gold stocks.

Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.

Gold exhibits high seasonality, which seems counterintuitive. Unlike grown commodities, the mined supply of gold is fairly constant year-round. But supply is only half of the fundamental supply-demand equation that drives pricing. Gold’s investment demand happens to be highly seasonal, and that’s what sets gold prices at the margin. Investors favor gold buying far more during some parts of the year than others.

This gold-demand seasonality is well-known and heavily studied. The seasonal gold year starts in late July as Asian farmers begin reaping their harvests. They plow some of their surplus income into gold. That’s followed by the famous Indian wedding season in autumn, with its heavy gold buying for brides’ dowries. That culture believes festival-season weddings have greater odds of yielding long, successful marriages.

After that comes the Western holiday season, where gold jewelry demand surges for Christmas gifts for wives, girlfriends, daughters, and mothers. Following year-end, Western investment demand balloons after bonuses and tax calculations as investors figure out how much surplus income the prior year generated for investment. Then Chinese New Year gold buying flares up after that heading into February.

These understandable cultural factors drive surges of outsized gold demand between late summer and early spring. There’s one more seasonal gold-demand spike in spring, where the causality is murkier. Spring’s increasing daylight and warmer temperatures breed optimism, which favorably affects investors’ sentiment. That leads to gold buying too among northern-hemisphere investors, the vast majority of the world’s.

While these major income-cycle and cultural factors fuel higher gold investment demand throughout the year, they disappear during market summers. June and July in particular are largely devoid of recurring seasonal gold buying. The markets take a back seat to vacations, with traders leaving their computers to bask in the glorious sunlight. So gold and its miners’ stocks, along with other markets, tend to drift listlessly.

A couple weeks ago I quantified this summer-doldrums phenomenon in depth for gold, silver, and their miners’ stocks. Summer has always been the weakest time of the year seasonally for the precious-metals sector. That naturally spawns widespread bearishness during market summers, which can really be challenging to weather psychologically. But it creates the best seasonal buying opportunity of the year!

The highest-probability-for-success time to aggressively deploy capital in gold stocks seasonally occurs in their typical mid-summer lull in July. That comes after the worst of the summer-doldrums downside in June, but before the Asian harvest buying gathers momentum in August. In the heart of summer, gold stocks are often shunned and therefore relatively cheap. That’s when contrarians seize the opportunity to buy low.

Quantifying gold’s seasonal tendencies during bull markets requires all relevant years’ price action to be recast in perfectly-comparable percentage terms. That’s accomplished by individually indexing each calendar year’s gold price to its final close of the preceding year. That’s set at 100 and then all the gold-price action of the following year is calculated off that common indexed baseline, normalizing all years.

So gold trading at an indexed level of 105 simply means it has rallied 5% from the prior year’s close, while 95 shows it’s down 5%. This methodology renders all bull-market-year gold performances in like terms. That’s critical since gold’s price range has been so vast, from $257 in April 2001 to $1894 in August 2011. That span encompassed gold’s last secular bull, which saw a colossal 638.2% gain over those 10.4 years!

So 2001 to 2011 were certainly bull years. 2012 was technically one too, despite gold suffering a major correction following that powerful bull run. At worst that year, gold fell 18.8% from its 2011 peak. That was not quite enough to enter formal bear territory at a 20% drop. But 2013 to 2015 were definitely brutal bear years, which need to be excluded since gold behaves very differently in bull and bear markets.