It may be hard to imagine, but there is one market position that has significantly outperformed most major commodity indices of late – the gold-to-oil ratio, which is a position that involves selling oil and buying gold.
In fact, as Petromatrix’s Olivier Jakob points out, the ratio has reached its highest level since 1999 – when WTI was $10 per barrel. And with many analysts foreseeing further strength in gold in the near-term, the odds the ratio will continue rising look good.
For example, both UBS and Goldman Sachs have raised their gold forecasts in 2009 to $1,000 per ounce based upon, among other things, continued strength from ETFs as the financial crisis continues to intensify the case of gold becoming the currency of last resort.
Of course, as some other market players note, it could backfire if the overall trade encourages some bullish momentum in WTI.
Related link:
Goldman Sachs bullish on ‘currency of last resort’ gold – FT Alphaville