Gold's momentum chasers may be in for disappointment

Gold has just concluded its best quarter since 1986, but those looking to buy it now might wish that it had plunged to start the year.

That may sound counterintuitive, given the perception that commodities tend to trend in one direction or another for long periods of time. But a look at returns from the past 30 years shows that gold tends to have better results in a given quarter when the preceding quarter was terrible than when it was terrific.

Read MoreGold heads for biggest quarterly rise in nearly 30 years

To do this comparison, the past 30 years of quarterly returns were narrowed to those with returns in the top 10 percent (with a gain of 9.8 percent or more) and those with returns in the bottom 10 percent (with a loss of 5.5 percent or more). The next step was checking on the returns in the quarters that followed those best 12 quarters, and on the returns that followed those worst 12.

The average quarterly move after a fantastic quarter is a 2.5 percent rise, which is better than the average move across all quarters of a 1.3 percent rally. However, the average move across a wretched quarter is a 3.4 percent rise, with the median even higher, at 4.0 percent.

Mean return
Median return
All quarters 1.32 0.48
Quarters after top-10% quarters 2.54 2.87
Quarters after bottom-10% quarters 3.41 3.95

For instance, the last time gold rose more than 10 percent was in the third quarter of 2012. In the final quarter of that year, the metal lost 5.5 percent of its value.

Actually, over the past 30 years, gold has followed a top 10 percent quarter with an even better quarter only once. And it has never followed a bottom 10 percent quarter with a worse quarter.

This is probably the finding one would expect, given the impact of regression to the mean. But it should at least encourage gold bulls to curb their enthusiasm.

That is, for the same factors that led gold to jump 16.5 percent in Q1 to spur a comparable rally in Q2 would be an unusual outcome indeed.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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