Sean: Can you briefly go over the relationship between gold and oil? Vaguely remember a video from…

Sean: Can you briefly go over the relationship between gold and oil? Vaguely remember a video from the "Ultimate Wealth Report" on this subject. Sincerely, Randy in Hawaii

Gold is in red, oil is in black on this weekly, 10-year chart. Oil contributes to influencing gold because the price of oil is one of the main contributors to inflation not only because of one's fuel costs but because oil is in many products from clothing to cosmetics, etc. and also because there's transportation costs that are factored into the end-product's pricing. As oil rises, it can cause inflation overall to rise and gold rises as an inflation hedge. Now...on another note, I think you may be also referring to a chart I did once on the oil-to-gold ratio (or vice versa).

Disregard the other indicators such as the moving averages, RSI/MACD which are tracking only the gold price.

This is the oil-to-gold ratio going back to the 1980's. When it's a low reading, oil is cheap relative to gold and when the reading is high, oil is expensive relative to gold. So it doesn't mean one or the other is expensive or cheap independently but relative to each other. So in this chart, we can see that oil should be priced much higher because it's so cheap, in terms of gold.

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