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The Gold To Crude Oil Ratio Is Getting Jiggy

ByDragonfly Capital
AuthorGregory W. Harmon
Published 11/07/2012, 12:05 AM
Updated 05/14/2017, 06:45 AM
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Gold (GLD) and Crude Oil (USO) went through a period of high correlation in 2009 which was quickly reset a bit higher in 2010 in to 2011. Since then though the relationship has been tenuous and may be on the verge of a major change. The ratio chart of Gold to Crude Oil below shows the two consolidation zones mentioned and now a break of a symmetrical triangle. That break is being retested now, and if it holds up there is a target of over 7 on the ratio, 36% higher than where it stands today.

Gold (GLD) vs. Crude Oil (USO)
GLD-USO
The momentum indicators (RSI and MACD) shown in the chart are both supportive of a continued move higher as well. With Gold in the form of the GLD at 163 and Crude Oil in the form of USO at 31.60, that put broad limits on a potential move. With no change in Crude Gold would rise 36% to 222 and with Gold held constant Crude could fall to 23.15. Neither extreme is likely but it does suggest that Gold may be bottoming while Crude Oil is just taking a breather before another leg lower.

Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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