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January 04, 2008

Nominal Gold & Gold-Oil Ratio
by Gary Tanashian

Gold is getting into an area at which it could take a hit at any time. This would be healthy and perhaps add sustainability. The chart says our 920 target remains locked and loaded, but I would rather get there with a little angst in the mix as opposed to a hyped up blow off. Shorter term indicators are becoming over bought and a test of the breakout to all time highs would be healthy.

It is interesting to note that oil's all time highs are being jiggered in the media to adjust for inflation and not panic people (it's only at the 1970's levels!) while the barbarous relic of the past has not nearly kept up with inflation. "Who would own such a bum asset?" asks the average paper pusher. This is a big part of the reason for our $2000+ eventual (years out) target; catch up moves can be a bitch. Meanwhile, in the here and now, we await a break of the downtrend in the Gold-Oil Ratio. Here is a chart with an interesting correlation to the USD for your consideration.

PS: I am aware of all the typo's on the charts - it's early. ;-)

Gary Tanashian
http://www.biiwii.com/

Disclaimer: biiwii.com does not recommend that any trading or investment positions be taken based on views expressed on this site. If you speculate or invest it is suggested that you consult a financial advisor qualified in your area of interest.

Copyright © 2005-2009 Gary Tanashian

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