Gold is No Better

This is not a chart of gold (in U.S. dollars), nor a chart of oil (in U.S. dollars). This is a chart of oil, in gold

See larger image

Since it’s a bit mind boggling, I’ll explain…

The chart plots the ratio:

Gold (price of 1 futures contract)
Oil (price of 1 futures contract)

And it answers the question: “How many units of gold does it cost to buy one unit of oil?”

As you can see, at the beginning of 2009, it took 7.5 units of gold to buy one unit of oil. Then the relationship changed…

It now takes much more gold to buy one unit of oil. At its peak, you would have needed 22 units of gold to buy 1 unit of oil.

With this as a starting point, we can ask: “How has the ‘gold price’ of oil changed over the past three years?”

With the “gold price” of oil now 19.5 units, up from the 2009 “gold price” of only 7.5 units, that means the price of oil has gone up 160%!

That looks pretty inflationary to me. I’d say gold loses its luster as the inflation-fighting “anti-money” when you actually try to use it as money.

If you haven’t done so already read the Survive & Prosper issue on “Why Trading Gold for Oil Doesn’t Make Gold Money“.

 

Dow Heading for Historic Drop – Take Immediate Action

World-renowned economist Harry Dent now says, “We’ll see an historic drop to 6,000… and when the dust settles – it’ll plummet to 3,300. Along the way, we’ll see another real estate collapse, gold will sink to $750 an ounce and unemployment will skyrocket… It’s going to get ugly.”

Considering his near-perfect track record of predicting economic events long before they occur, you need to take action to protect yourself now. Get the full details…

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Categories: Economy

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.