Friday, January 11, 2008

Gold-Oil Ratio predicting a rise in USD?

As shown previously, the Gold-Oil Ratio (GOR) and USD have been partners in downtrend during the latter part of the manic commodity, stock market and foreign currency rises. Well, what is good for the gold miners (GOR breakout) may be good for Uncle Buck as well if the correlation holds true. Given that gold is extended vs. not only USD, but also major foreign currency we again view the sector as ripe for a correction. But that would be a what... Beuller? An opportunity. Because now fundamentals are kicking in all around and it again says here that to ride a major bull market with funda's confirming you need to tune out the noise. I am now more comfortable with the commodity bulls (oil, indust. metals, etc.) - bullish on all non USD assets and making no distinction between the monetary and the economically positively correlated 'resource' trade - having been tamped down. So bring it on... a nasty correction or continued run away bull action. I for one am ready for either.