The gold-oil price ratio is reaching a historical limit

John Robertson


The gold-oil price ratio is reaching a historical limit. Historical market ratios provide guidance about future movements .... at least until they don't. The more closely followed relationships hold because they are reinforced by expectations that they will persist leading to self fulfilling trading strategies. But relative prices can always change if new economic forces intervene. The chart shows the purchasing power of gold measured in terms of barrels of oil. The dramatic movement during the second half of 2014 has been within the full span of a well-defined 30 year range which now suggests another change in the direction of relative prices is near.

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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