Friday, August 24, 2007

Trading Oil and Gold

Kids, don't try this at the kitchen table.
In "Some Thoughts on Gold (on and off topic)"we said:
While this blog is not focused on commodity trading per se and is definitely not a gold bug hangout, partly because I am convinced by Roy W. Jastram's arguments in "The Golden Constant" summarised at the Mises Economics blog:...


It is a subject of which I am experienced.

On-topic: About six months ago I noticed the gold/oil correlation was acting tradable.
During a mis-spent youth I remember the correlation was about .92, pretty tight, not that interesting, better things to trade.

Here's someone else who's noticed, from the June 20, 2007 Resource Investor:...

Today MarketWatch crossed this Headline:
1:44Dec. gold closes at its highest level since Aug. 15

This morning it took 9.49 barrels of oil to buy an ounce of gold. At 2:30 EDT 9.52.
If you're sharp enough to understand what I'm saying, you're smart enough to figure out some fancy (or not) trades.

In 2002 I wanted to know the behavior of AU under deflation. The academic arguments were conflicting and hard core gold-bugs pointed to the action of HM in the '29-'39 time period to make a case.

So I headed out to Dakota and am probably the last person (outside of company employees and the movers) to see some of the HM records.
I wrote myself a monograph.
Have fun. Make money.