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Oil in Big Macs: Chart of the Day

|Includes:RJA, The United States Oil ETF, LP (USO)
Source: Gregor.us

The idea for this comparison of Oil to Big Macs, is that a Big Mac is representative of a basket of agricultural goods and thus compares the relative advantage of trading food for oil. Whats interesting about this is that theoretically, it should be a somewhat inflation-adjusted measure of oil prices. As of now it appears agricultural goods is undervalued relative to Oil. Interesting to see how the plays out in a pairs trade?

Short Oil (USO United States Oil Fund LP)

Long Agriculture (RJA ELEMENTS - Rogers International Commodity Index Agriculture Total Return)

Disclosure: No Positions
Stocks: USO, RJA