Commodity Trade Mantra

Posts Tagged ‘Gold-Oil Ratio’

What Is the Gold - Oil Ratio Telling Us?

One way to establish if a commodity or asset is relatively expensive or inexpensive is to price it in something other than a fiat currency, for example, gold. As a thumb rule, oil is relatively expensive (gold is relatively inexpensive) when the Gold-Oil ratio is below 9 & oil is relatively inexpensive (gold is relatively expensive) when the ratio is above 20.

Why Base Price Of Gold Should Be North Of $2,000

Base price of gold should be over $2,000 an ounce if we average gold-oil ratio for the previous four decades & when we factor in the ongoing geo-political events taking place in the Middle East & Russia-Ukraine as well as the peaking of global oil production. And that does not include the huge monetary printing & debt.

Historic Gold : Oil Ratio Forecasts A Much Higher Price For Gold

While many analysts on Wall Street forecast gold to head lower in 2014, they fail to realize that its historic ratio to oil points to a much higher price. It seems like everything today is based on financial wizardry rather than fundamentals of a physical economy.

The Energy Factor to Push Gold to New Highs

Energy cost increases substantially in the gold mining industry today as they are extracting gold at 20 times less the yield as in late 1800’s. As ore grades decline, it takes a great deal more energy to extract and process the same or less metal.

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