timwest

Gold Versus Crude Oil - 1990 to Now - 25 barrels oil / 1oz Gold

1818 30 28
Many of you replied to my graph about 25 barrels of oil             for 1 oz of Gold             chart and wanted to see more time. If you click on the time scale on the chart, you can see more time going back to 1990.

You can see how there is no quarterly low above 25 and there are peaks up to 27 and just over 28.

Time will tell if the past is a useful reference for the present.

Tim 1:08PM Friday, January 9, 2015 25.53 ratio XAUUSD/CL1! Gold/Crude Oil            
Comment:
snapshot


One ounce of gold shot up to nearly 46 barrels of oil!

Now that is a serious supply glut!

Tim March 31, 2017 5:09PM EST
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Are you back in when it was close to 22?
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Tim, I really did not think the answer would have this much clarity in terms of a signal to dump gold and buy oil, or just buy oil. Of course, I like it a lot because I am super bullish on oil and we sell too many gasoline cars today and a ton of gas guzzlers (people are back with the Big Expeditions) to give up on oil, and say that Saudi Arabia has just given up and will let US produce oil from the shale / sand / etc. Thank you for sharing.
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Here is my prediction about Gold/Crude ratio made 3 months ago. I believe the ratio will most likely go slightly down for the rest of the year 2017.

OIL Will Be More Valuable Comparing to Gold in 2017


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Tim, agree with your analysis although by other reasons.
snapshot
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The trade did pay off for a while. Now astronomically high again.
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I love the volatility in this ratio: It fell from 25 to nearly 19, then rocketed up to 30 briefly. This is still a good time to sell Gold and Buy Crude. I just made a chart to show that you can also sell your gold to buy silver, which is historically low relative to gold.
GOLD/SILVER RATIO FLASHING A MAJOR SIGNAL
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In 1986 it reached as high as 36, in 88' it was 32. Definitely an opportunity here at some point.
+3 Reply
Hi Tim,

It's indeed a great chart, and I also feel like longing oil in recent days. But which way do you think is the best way to buy oil? Just use ETFs like USO and OIL? I read something about these two etfs saying according to their operating method, the return will be a lot compared to the return on spot price of oil.

Best,
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Well, what you need to see to get USO to go up is for the front month contract to go to a premium to the next month, then roll into the next contract at a lower price. Then repeat the process many months in a row. For the last few years, however, this process has destroyed capital as the front month has gone to a discount and the funds end up selling low and re-buying high. It has been a train wreck in slow motion so far. Keep an eye on that important information to determine if USO will be a winner or not. I am looking at oil companies to get exposure down here in Oil. Nothing is easy, but I would try selling puts against crude oil futures and that way you can make money if crude just goes sideways from current levels. Gold could also go down to make this ratio come back in line, but I'm not a fan of shorting gold when the central banks of the world are creating credit like there's no tomorrow.
+2 Reply
Thanks for the great analysis!
+1 Reply
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