Is the market volume for August 2012 lower than previous years?  I was reading an article over the weekend that was asking where had all the investors gone.  And, it has seemed that the volume is down on most instruments.  So I decided to look at the volume to determine if it could shed some light on whether it just “seemed to be down” or was it actually down for the summer.

Average Market Volume

First, I looked at the volume averages for Gold, from June 1 to August 20 for the years 2008 to 2012.   I choose Gold because it is such a poplar instrument among investors.

According to the averages for June – August by year, we are down by about 35,000 contracts.  But the volume for August has really seemed to be lower than average (based on my own trading experience).   Perhaps we should look deeper at the average volume on a per month basis for 2008 to 2012.

Market Volume Analysis

Market Volume AnalysisHowever, the Average Volume for Summertime Trading gives more clues as to why it seemed that volume was off in August.  June 2012 saw an increase in volume, while July 2012 was about the same as 2010 but down about  25,000 contracts from July 2011.  The biggest difference is the average volume for August 2012 — down about 135,000 contracts from August 2011.  However, it seems that the average volume for August 2011 was the exception.  If we go back and compare August 2012 average volume to the average volume of August 2009 and August 2010, we actually had an increase in volume.

The chart also shows that from 2009 to 2012, June volume was increasing; July 2009 – 2011 was increasing but slightly lower in 2012.  The August 2011 spike (over 135,000 more contracts on average) caused the volatility that we experienced and remember from last summer.  However, it was “out of the norm”.  Instead of comparing to the volatility of August 2011, we need to broaden our scope and combine several years to see how it compares.  Using this type of comparison actually shows that the August 2012 average volume is within the normal range of previous years minus the spike of 2011.