Friday, May 9, 2008
Oil & Dow-Gold Ratio
Global markets are not looking good pre-NY open. Crude oil is blowing off but if that is the reason gold is rising then contrary to what some gold bugs think, it is not the primary fundamental. That would be the unwinding credit system. I have not forgotten my bearish call on oil from a few days ago and will of course answer for it here if proved wrong. Obviously the price target for USO is kaput, but I have got to believe shorts are covering and the most unhealthy of 'investors' are buying crude @ 124. We'll patiently await the top.
Also, there is the matter of the Dow-Gold ratio. Is it time for a return to angst-o-rama? Possibly, but the ratio has not broken down as of this moment. It looks like I am about to lose my short term gold bet to that wise guy fundy analyst but this will be beer munny well spent and I can't think of a better dood to buy a six pack for.
Check out the last two COWs. This is why I carry my core miners and why I cycled my USD's immediately into Zürich gold bullion once some astute readers finally placed BullionVault orders near the recent lows (it occurs to me that my short term bearish writing doesn't do much for commission generation ;-)) as the long term bull market remains intact; because these bulls have a tendency to buck off traders who try to get too cute with their little technical analysis noodlings or who listen to too many bull horns imploring them that the end is here. It's called a whipsaw and it can burn up a lot of commission and create a lot of heartburn. Edit (8:08) Adding CRB chart which sports bullish ascending triangle thanks in large part obviously, to oil.