this ratio had been above 40 awhile back. then it got down to about 15 recently. now almost back up to 30.
A nice interactive chart oil/Gold
Can some body explain the ramifications of this ratio going up and down
Also at any given ratio, what does that possibly mean
Does this happen very often
Just trying to learn, what to watch, as I own physical gold and silver
Please keep up the info post, if anything interesting happens
we had a bit of time with gold surging, while oil and copper went sideways to lower.
looks like that might be changing.
the ratio (gold-oil) got a bit too stretched, now maybe oil needs to break out to the upside. the ratio might get back closer to its long term average. (15?).
we were recently close to 30. if we see gold 1400, oil 70, that would put us back to about 20-1 ...
Wglassfo,
To answer your question. The ratio between commodities speaks to economic activity and substitution of commodities.
Bean / corn ratio stays within a certain band because if bean prices get too high corn farmers will stop planting corn and plant more bean acres and the supply will bring the soybean price back down. (and thus, the ratio will come down)
With metals, there is a substitution aspect as well as an economic activity narrative. Copper outperforms gold in a brisk economy due to it's industrial uses and underperforms during recessions (or expectation of a recession)
Gold/oil ratio is about inflation IMO. They are correlated. If oil got to 400$ per barrel gold would likely have rallied along with it but perhaps not as much and the ratio would be toward the high end. There would be adjustments by energy consumer/producers toward other sources of energy and oil would come back down, as would the ratio.
Interest rates / stock prices are also correlated (negatively) and worth paying attention to.
Not sure if this post is what you were looking for. ....
Best,
Joj