I remain bullish gold over the medium to longer term, as it remains undervalued compared to major markets such as the US market. The dow to gold ratio has been near record lows for months now, so at least a mild reversion was inevitable.
I am out of gold in the shorter term, as it is expensive compared to almost every other commodity. I see more opportunity in silver and platinum as both are historically undervalued relative to gold. Money I had allocated to gold I have shifted into oil related investments.
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One ounce of gold buys around 47 barrels of crude, a multi decade record. I expect this is unsustainable as usually commodities like oil and gold tend to move together with a broad range.
Oil has lost over 80% of its value since WTIC almost hit 150 per barrel.
A similar decline in gold would see the price at around 370 US per ounce. I am sure most gold bugs would be loving a price that low to accumulate.
My point is that I see more relative upside in oil than gold at these levels, at the very least until gold buys 30 barrels per ounce, which is still expensive.
I wont short gold, as theoretically there is nothing stopping this ratio hitting 100 or higher, as the market can be irrational, but is see more merit in oil and the white precious metals like silver and platinum than gold when I consider the complete commodity market dynamics.
I am long oil and silver/platinum. To all of you making money out of gold moves, well done.
THE ABOVE IS NOT INVESTMENT ADVICE. DYOR.
Glta
