The red-hot gold stocks have spent most of March in consolidation mode, grinding sideways near their 2016 highs. Interestingly this month’s rally pause is par for the course seasonally in gold-stock bull markets. Like gold itself, this sector tends to slump to a seasonal low in mid-March before embarking on a strong spring rally in April and May. With gold stocks back in a bull, their seasonality warrants consideration.

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 like crops, the mined supply of gold is 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 at 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 and 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. And Chinese New Year gold buying flares up after that heading into February.

These understandable cultural factors drive surges of outsized gold demand between summer and early spring. But interestingly, there is one more gold-demand spike in spring. Over the years I’ve seen a variety of theses explaining this April and May seasonal gold rally, but nothing definitive like for the rest of the year’s gold seasonality. As silly as it sounds, I suspect spring itself is the reason for this demand surge.

Sentiment exceedingly influences investing, which requires optimism for the future. Investors won’t risk deploying their scarce capital unless they believe it will grow. And the glorious increased daylight and warming temperatures of spring naturally breed optimism. The vast majority of the world’s investors are far enough into the northern hemisphere that spring has a major impact. This seasonality extends to stocks too.

Whatever the reason, gold definitely exhibits strong bullish spring seasonality as this chart reveals. As prices behave very differently in bull and bear markets, seasonality differs between them.  Gold was in a mighty bull market between April 2001 and August 2011, powering 638% higher.  2012 saw a normal bull-market correction following an incredible upleg, seeing gold down 18.8% at worst from its 2011 peak.

But everything changed in 2013 as the Fed’s wildly-unprecedented open-ended QE3 campaign ramped to full speed. That radically distorted the markets, levitating stocks which crushed demand for alternative investments led by gold. So gold plunged into an artificial bear that year. In Q2’13 alone, it plummeted by 22.8% which was its worst calendar quarter in an astounding 93 years! Gold’s bear continued until late 2015.

Remember the formal threshold for declaring bull and bear markets is a 20%+ counter move from the preceding extreme on a closing basis. And as of early March, gold reentered formal bull-market territory with a 20%+ gain off its mid-December secular low! This new bull has been confirmed by all kinds of major technical signals, including gold’s 200-day moving average turning up, a Golden Cross, and high volume.

So with gold officially back in a bull market in 2016, it’s important to understand its past bull-market seasonality. That extends from 2001 to 2012, with 2013 to 2015 excluded since they were Fed-induced bear-market years. The methodology used for this chart is simple. The gold price is indexed within each calendar year, which keeps percentage price moves comparable across years despite differing prevailing gold prices.