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Some investment ideas for May

Investment

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April slowly and surely comes to an end. And while it kept the tradition of being good for stock markets, as the Wall Street indexes climbed to just 1% under its peak, the investors are beginning to look boldly next May.

Here are some of the best investment opportunities during the next month.

Gold and Precious metals

After a particularly bad month for the precious metals, the gold posted four consecutive weekly losses and reached its lowest value for the year. Now, according to many traders and analysts, the precious metal reached its bottom for the year and may return to an uptrend.

The good news is in several directions. First of all, central banks continue to buy gold. According to the data of the People’s Bank of China, the country increased its gold reserves to 60.62 million ounces in March, compared with 60.26 million ounces in February. Over the last four months, China has increased its gold reserves by a total of 42.9 tonnes.

Russia has also increased its gold holdings. The country has bought about 274 tons of gold bullions in 2018 with an estimated worth nearly 11 billion USD. In February 2019, Russia accounted for around 6% of the world’s total gold demand.

In addition, demand for gold in India is expected to gain momentum from the upcoming wedding season. Gold is traditionally a popular wedding gift in India, where there are about 20 million weddings per year.

Moreover, gold is usually a safe-haven for investors during markets turmoil. During the last month, the risk appetite returned after several positive data from the US and China, as well as the surprisingly strong start of the earnings season. However, on the corporate front, the analysts had not yet adjusted their expectations for the end of the year, which are now quite optimistic. Once the guidance is updated and adjusted according to the latest macroeconomic data, possibly the risk appetite will cool down and the price of gold will rise up. Moreover, the problems in Europe remain and even deepening, which will be further support for investments in precious metals.

Time to withdraw from the US and European indexes

After strong April, most of the traders will cash out their profits. In the heart of this is the rule “Sell in May and go on holiday”. And such rule has historical proves. The average growth of S&P 500 in April is 1.3%, based on the data for the period 1929-2019.

Actually, April is the second best month for the Wall Street indexes after July. The returns of the indexes in April is equal to those in December and slightly above the average growth in January.

However, unlike April and the record high US indexes, May is the month of withdrawal. The fifth month of the year marks the beginning of a six-month period that brought to investors in Dow Jones returns of only 0.3% during the period from 1950 to 2013, against an average yield of 7.5% over the November-April period.

Cryptocurrencies

Last year was terrible for investors in cryptocurrencies. There was only once exclusion – April. In the fourth month of 2018, the Bitcoin appreciated by 33%, which was the strongest gain for the cryptocurrency during the year.

This year, the situation is similar after Bitcoin appreciating by 25%. The general market sentiment around cryptocurrencies is far more positive now than it was the same time last year. A pullback was expected but very few in the industry predicted things would drop so low and virtually all gains would be wiped out. As markets appear to be coming off the bottom, crypto traders, analysts, holders, and investors start looking towards the next big bull run and it could be a monster.