Black or Yellow Gold, Which Do You Prefer?
- Posted by Greg Harmon
- on September 5th, 2014
Both commodities, Crude Oil ($USO) and Gold ($GLD) have their dedicated followers. They are the most active commodities traded. They can be influenced by geopolitical situations, economic conditions, inflation and public policy among other things. There is nothing to say there is a long term relationship between the two and that makes sense. One gets its value as the resultant of the demand for and supply of it and other energy resources. The other gets its value from who knows what. But there has been an odd relationship between them over the past 14 months.
The ratio of Crude Oil to Gold has stayed in a very tight range over that period. This followed a 2 year period where the ratio of the prices was all over the place. It traced out a bearish Gartley harmonic and pulled back before rocketing higher to the consolidation zone. With a bounce off of the bottom of the zone it looks like a good time to buy Crude Oil against Gold for a run to the top and maybe higher.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)