It is interesting to note that oil's all time highs are being jiggered in the media to adjust for inflation and not panic people (it's only at the 1970's levels!) while the barbarous relic of the past has not nearly kept up with inflation. "Who would own such a bum asset?" asks the average paper pusher. This is a big part of the reason for our $2000+ eventual (years out) target; catch up moves can be a bitch. Meanwhile, in the here and now, we await a break of the downtrend in the Gold-Oil Ratio. Here is a chart with an interesting correlation to the USD for your consideration.
Click charts to enlarge
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really enjoy your analysis on gold, especially on the oil-gold ratio, that bullish divergence is really tempting for me to add on gold position.
ReplyDeleteThanks TC. But what I use gold/oil for is not so much any read on where gold is going as it is to get a read on the potential for bottom line fundamental improvement of the gold miners which are, like any other business subject to costs - oil being an important one.
ReplyDeleteI see. But the value of gold mining stocks seems to be overpriced in the near term, with the XAU index gaining more than gold in percentage terms last year, considering that oil price is hurting their fundamentals as you have said.
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