Monday, July 21, 2008

Changing leads in the oil-gold tango

From The Mess That Greenspan Made:
An increasing number of observers (including myself) tend to agree with the premise of this WSJ story($) regarding the near-term outlook for oil and gold though, admittedly, one Gulf Coast storm or one wayward Middle East missile could change that very quickly.

While never a big believer in the merits of the "oil-gold ratio" as a predictive tool, it may be telling an important story at the moment.
Gold May Benefit as Oil Falls
Yellow gold, which often tracks the crude-oil market, could outperform black gold in the foreseeable future because of financial-sector and inflation jitters.

Some analysts also suggest that the rally in oil prices this summer may be overdone, which could lead to the metal's strength....MORE