Got Gold?
Chart found at The Bullish Bear
The thought occurred to me that the prospect of America, finally, standing up for itself by accessing its crude reserves could lower oil prices, in the near term.
Gold miners have been hit hard by rising expenses resulting from high oil prices. As you can see from the chart above, the ratio between oil and gold has averaged 15. It is currently at about 6.4.
Think about that for a moment. Traditionally, one ounce of gold buys 15 barrels of oil. Today, one ounce of gold buys only 6.4 barrels. Wouldn’t gold mining stocks benefit twice over by the spread going back to normal and lower drilling expenses? That may be why some gold miners has a good day on Friday.
My Back Pages wrote
Then there’s the oil/gold ratio, which hasn’t been this high since the summer of 2005. That was an excellent moment to buy gold, incidentally, and one when oil prices stalled for a time.
Leave it to the politicians to, finally, get something right after being wrong for decades.
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