Managing Editor

Gold 1, Oil Analysts 0

The relationship, I'm afraid, cannot be annuled. Goild and oil are wed for life. Bottoming in the gold/oil ratio, in fact, is a herald of impending economic slowdowns.

The last five US recessions followed 20 to 30 percent declines in the gold/oil ratio from then-recent highs. The current market got followers of the ratio particularly nervous. The ratio nearly 50% from its February 2007 high to a trough at 6.4-to-1. If nosedives in the ratio are indeed predictive, the recession forecast then would figure to be a real whopper.

And why would a dip in the ratio predict bad times to come? Put simply, rising oil prices – relative to a monetary constant like gold -- slows industrial and consumer demand, choking off economic growth.




On Nov 13 08:10 PM The hand wrote:

> maybe it is time for gold to leave its relationship with oil. this
> marriage should annulled as they have little in common except a coincidental
> relationship that has little love.
>
>