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drbubb

RATIOS : Gold-to-Oil , and Oil-to-Gold

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It certainly looks to me that Gold is trying to delink from (weak) oil here

 

Update ... http://tinyurl.com/gold-wtic

004tt1.png

 

long term: http://gold.approximity.com/Gold_Oil_Ratio_since1946.pdf

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Flipping it around: here's Oil-to-Gold : ie 100 barrels Oil = ? ounces of Gold

 

(Historical) :

Zeal082004C.gif

Oil looked expensive at 12-13 ounces per 100 barrels / ie 0.12-0.13 oz per 1 barrel

 

Where is the Ratio now??

 

(Current) : Oil-to-Gold : Ounces of Gold to make 1 Barrel ... http://tinyurl.com/wtic-gold

003ks9.png

 

It has been trading consistently above 0.13 for many weeks.

A break of that level (0.13) would be a sign that the Gold is trying to decouple.

And a fall below 0.125 (?) would be a further confirmation of that

 

Equivalent: 0.13 = 7.69 Barrels per Gold ounce

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So in other words the average gold:oil price ratio has been roughly 14 over the past 40 odd years.

 

I know the continuing rationale for this was debated on a main thread somewhere, but interesting nevertheless that with oil at say $100, an "average" target for gold based on the above ratio would be $1400.

 

I suppose I'd like to think we see this average reached in the near future to reflect some level of fair value against oil, but the reality is that this average ratio has only been hit once, briefly, during the commodities bull since 2000. Perhaps another scenario is that oil stays flat or starts to grow again and bootstraps gold with it. Thus an average ratio so far during the bull of say 12 will see gold at $1200 with oil at $100; if oil rises then gold does too? ie. we are not reliant on a reversion to the mean of 14 times to see a nice up leg in gold (in line with your charts below Dr.)

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KEY LEVEL:

 

Looks like Gold-to-Oil is right at the key level: 0.13

 

$811 x 13% = $105.43.

 

If oil falls below this, perhaps because Gold rises while oil lags, that would be a sign of the decoupling

(that I have been waiting for.)

 

It's nice to see Gold showing some strength while stocks are so weak.

That's how it supposed to work, especially in September

 

bigfm0.gif

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So in other words the average gold:oil price ratio has been roughly 14 over the past 40 odd years.

 

I know the continuing rationale for this was debated on a main thread somewhere, but interesting nevertheless that with oil at say $100, an "average" target for gold based on the above ratio would be $1400.

 

That's not quite right.

 

KEY LEVEL for oil-to-gold is 0.13

And Gold-to-Oil is: 1/0.13 = 7.69

 

So Oil x 7.69 = $100 x 769= $ 769

Currently, oil is $106, so: $106 x 7.69 = $815

That key support level is holding so far - but only just

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That's not quite right.

 

KEY LEVEL for oil-to-gold is 0.13

And Gold-to-Oil is: 1/0.13 = 7.69

 

So Oil x 7.69 = $100 x 769= $ 769

Currently, oil is $106, so: $106 x 7.69 = $815

That key support level is holding so far - but only just

Yes, but rather than looking at support, which is obviously very important at the moment, I had the target averages in sight from this bull market of the last 8 years, which should be in the range of $1200-1400 at $100 oil. We are obviously way off that and at the bottom looking for support I agree.

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Here's OIL in Euros : WTIC-to-FXE

 

003eg7.png

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TIME to buy oil, maybe

 

aa0bs9.gif

w579.png

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I better get myself down to Halfords, pronto! ;)

This might not translate well outside of the UK... :D

 

sadly, that lower channel did not hold

 

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sadly, that lower channel did not hold

 

Easy for me to say now, but as someone who pays passing notice to charts, although i do believe some of the points posted by smarter investors than myself, i'm beginning to wonder whether charting has any bearing at the moment; as everytime someone puts one up in the expectation of floors being reached, the brakes don't seem to work!

 

Not just that particular chart so no offence, just a general comment are chartists flawed in the current climate?

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The Oil-to-Gold ratio has finally broken down

001ha0.png

 

This suggests that Gold has decoupled from (weak) oil.

 

When I look at the Oil chart, I still only see an A-wave down, and so a bounce in Oil,

may be followed by a retest of the lows.

 

Now gold may be free to move up on its own

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Easy for me to say now, but as someone who pays passing notice to charts, although i do believe some of the points posted by smarter investors than myself, i'm beginning to wonder whether charting has any bearing at the moment; as everytime someone puts one up in the expectation of floors being reached, the brakes don't seem to work!

 

Not just that particular chart so no offence, just a general comment are chartists flawed in the current climate?

 

Come on! You need to have a little patience!!

When I show a chart and say "possible low (maybe)" I am identifying a possible turning point.

As a trader, In take a smallish position sometimes when it touches these points, and then wait to see

how it behaves afterwards. If we get a good turn out of the chartpoint, then I look for an entry point

to take a bigger position. That's the safer way to play it.

 

Would you rather I let these points go by, and then tell you afterwards?

(i think you would tell me: Bubb, you are only finding those points in hindsight)

 

There arent many certainties in trading, only opportunities and windows, which have risks associated

with them. And watching these points (while trading them intelligently), is likely to give you far better

results than trading at random, based upon some fundamental story you hear.

 

The best of all, is to combine the fundamentals (look to buy what is cheap, and should get less cheap),

and then buy it when the charts provide good windows. But buy carefully and intelligently, as I have

described.

 

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Come on! You need to have a little patience!!

When I show a chart and say "possible low (maybe)" I am identifying a possible turning point.

As a trader, In take a smallish position sometimes when it touches these points, and then wait to see

how it behaves afterwards. If we get a good turn out of the chartpoint, then I look for an entry point

to take a bigger position. That's the safer way to play it.

 

Would you rather I let these points go by, and then tell you afterwards?

(i think you would tell me: Bubb, you are only finding those points in hindsight)

 

There arent many certainties in trading, only opportunities and windows, which have risks associated

with them. And watching these points (while trading them intelligently), is likely to give you far better

results than trading at random, based upon some fundamental story you hear.

 

The best of all, is to combine the fundamentals (look to buy what is cheap, and should get less cheap),

and then buy it when the charts provide good windows. But buy carefully and intelligently, as I have

described.

Nice advice

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What a move!

sckz4.png

 

Now oil is looking relatively cheap

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Yes, but rather than looking at support, which is obviously very important at the moment, I had the target averages in sight from this bull market of the last 8 years, which should be in the range of $1200-1400 at $100 oil. We are obviously way off that and at the bottom looking for support I agree.

 

Bump. Funny how things work out.

 

So is oil cheap or expensive, or does it no longer have any meaning Dr Bubb?

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Bunp again! Oil has been on a strong ascent since the August bottom to Gold.

 

The Gold to Oil chart looks like a steep walk up and down a hill since April, surprised to see little comment anywhere on these. Maybe reading the wrong threads(or not reading the right ones).

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