MyDVICE

- LETTER & VIEWS by NEV R. AGN

The Gold-Oil ratio updated.

25 April 2021

In my posts dated 9, 10 and 15 June 2020, I stated the proposition that the gold-oil ratio will revert to its 20-year average (see chart below – in particular note the March 2020 fiasco in oil markets that caused the ratio to skyrocket).  There is no question that this ratio is heading back to its long-term equilibrium level (between 12 and 15:1). Gold prices have in fact been on a stable downtrend whilst oil has been on a steady uptrend since Q1 2020.

Thus I will reiterate what I said last post: assuming a gold price in mid-2022 of $2000 and a gold:oil ratio of 14:1, Brent has the potential to rise to $142.  I think I will stick to my 120 forecast as stated in my posts last year.

METALS #6 - ENERGY #12

MyDVICE Letter & Views - the Finer Points in Mens Style and Well Being 1

(There's still enough time to get onboard this trade!)

Upcoming Posts (that were promised in June 2020 but I never got around to writing): 

(a) An options structure to profit from a move up in the price of Platinum.  Two strategies:  a play on the outright price and a play on the spread versus Gold.  (I still like platinum over gold and palladium.)

(b) Long term options structure to profit from a move to over 100 dollars in Brent by mid-2022. based on the mean-reversion of the gold-oil ratio.

10Y Data – Gold:Oil Ratio

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