What Crisis Is The Gold/Oil Ratio Predicting This Time?
The number of barrels of oil that a single ounce of gold can buy has never, ever been higher.
For the last 30 years, when the ratio of gold-to-oil spikes, something systemically serious occurs globally (as opposed to the usual bullshit "this is transitory" statements).
So what happens next?
(40 votes)
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I forgot about the annual meeting of sociopaths knuks.
Soooo, are we all heading to the location of our last boating mishap?
Davilis...You wrote that "It's saying sell gold and buy oil".
That is correct...in normal times.
Gold either is overpriced or either Oil is underpriced or perhaps it is a mixture of both?
But these times are far from normal.
But you did not consider the THIRD VARIABLE in this relationship...the value of the Almighty US Dollar.
Can another possibility be that the US Dollar is way overpriced, Gold is underpriced, and Oil is even more underpriced in the terms of existing US Dollars?
When they allowed the US Dollar to "float" back in the early 1970's they removed a yardstick against which measurements were made.
The problem is that you are using pre 1971 Financial Strategies in a World in which Mark to Market has been all but totally abandoned.
And the crisis to follow this relatively stable time will be your rude awakening that it does not work that way any longer.
Good luck. You will need it as you have failed to adapt.
TT, if I may, what do you see in the next 5 years as being a strong hedge? Cash, pm's, foreign currencies, russian oil? I'm able to move some money, but just don't know exactly where. My folks are good, and I'm single, no kids... late 30's.
I'm not TT, but... Pay off debt, downsize your life as much as possible, PMs, cash, bitcoin, guns and bullets, an RV just in case. Also buy new stuff you might have a hard time finding or that you might need over the next year or so. JJoin a local CSA (community supported agriculture, basically contracts with local farmers).
Here is what I can't understand. Why pay off debt? Take that money and convert it to gold lead or supplies. That debt will get wiped with everyone else's. Not moral but this stopped being moral a long time ago.
@ Gatorengineer:
If the whole financial works goes hyperinflationary, does that mean the "debts owed" suddenly disappear? Or do they hyperinflate along with the prices of everything else?
Sure, it's easier to pay off debts with a hugely inflated currency...IF you have the currency to make the payments. How will that work, if you've been "Bailed in"?
As "The Little Guy", the only way "The Rules" will EVER be re-made in YOUR favor (and mine), is if the parasites currently running the show are all replaced, OR, if YOU remake the rules in your favor.
Hate to be a downer, but there's a lot of parasites, most of whom are total psychopaths & sociopaths, who are determined to either win, or die trying. They will take this whole shit show down into Hell, before they'll ever give up, unless someone stops them.
For me, the reasons to get out of debt:
1. I don't owe them anything, which is a good feeling. Nobody loses sleep if they DON'T owe.
2. They no longer have a usurious claim to a percentage of my blood, sweat, and tears.
3. I don't have to worry about about what "paper" does, whether it's stocks, bonds, bank bail-ins, or any of the rest of it.
4. If (when) SHTF, there will be millions of people scrambling to find the nearest exits. By getting completely out of paper, you are getting completely outside...you walked through the exit already.
Being debt-free is an upraised middle finger to the banks (and banksters) - You are not playing their game. THAT alone, is reason to get out of debt.
TT excellent response.
+1
Being it right or wrong, it's possible and worth considering.
I am not the graph. But I also do not share the belief that a sudden reset will occur which catches everyone off-guard. There has been plenty of time to prep for all those that are paying attention. Buy your insurance (should have been done years ago...) and trade the opportunities like this.
I hear it saying buy all the tangible assets you can get your hands on. PM's, land, preferably productive land and fine art. I don't even trust paper oil because paper oil has to be paid off in paper money. Doom I tell you doooooom!
The only thing that can save the US economy is for Iran to blow up Saudi oil infrastructure. If that happens, the dollar is secure and oil goes to $300+. Gold would crash and some ZHers will be wishing they hadn't bet on the sky falling.
I'm on the fence at this point. With Iran having built tunnels and having filled those tunnels with missles/bombs, who knows where those tunnels lead? Saudi oil fields? Mecca? The Persian Gulf is not THAT wide. 30 years of tunnelling could get you a long way. Even if not in the tunnels, Iran has enough hardware to blow up all the Saudi wells/ports/depots/etc. which are only minutes from ships in the Gulf.
The thing with bombs in tunnels is that they cannot be shot down.
Well when you have 4 generation, debt based, fiat Ponzi scheme that spreads debt and death for over a century, massive malinvestments are bound to happen.
The unwinding of it will see quadrillions in debt based counterparty risk paper assets flow down Exters pyramid into the safest and most liquid assets.
Out of junk stocks, bonds and derivatives and into blue chip stock and bonds or cash.
Then out of US T bills, FANTAsy stocks and weak currencies into the most liquid currency backed by nuke armed war mongering psychopaths, the Dollar. ( this is were we are now)
The next stage is a horrible realization that all of these people rushing into the dollar is part of the plan to steal their wealth and bring about the Phoenix currency predicted on the cover of the Economist in 1988 for 2018 and the dollar becomes worthless and people then try for gold.
The final stage is when the now truly free market and chaos reaches a peak and the world finally realizes that silver has all along been the world's most recognizable, used, longest, liquid and precious form of money.
At this peak there is no reason why silver is not worth more than gold, since there is 6x more gold above ground than silver.
The Dow to silver ratio will reach 1:1 also.
Things that cannot go on forever... Won't.
We know how this ends, get there before everyone else tries.
It would be interesting to also include what happened in the troughs and not just the peaks.
I mentioned some time ago that as oil headed down there was no way the markets could stay up... King Dollar is very strong right now, if you weren't in cash going into last December then you're certainly feeling the pain now...
But this time is different.
/sarc
Has the World Reserve Currency ever been hyperinflated?
Hyperinflation has been restricted to regions where there has been some chance of escape.
I do not know...PERIOD.
But I believe that these are not normal times.
TT. No not like this. We are on completely uncharted waters. All previous reserve currencies were backed. That is why they were adopted as reserve currencies. The earliest 'reserve' currencies were adopted simply because the coin was minted with a consistent weight and purity that people could depend on.
The Romans had a kind of regional reserve currency on a much smaller scale. They diluted their currency and the hole thing collapsed. Their counterparts in the east, the Byzantines did not dilute their money, used sound banking practices, no fractional reserve banking, and went on for hundreds of years after the Romans.
There is a pretty good article about the history of reserve currency on this obscure web site called Zerohedge. Here is the link. http://www.zerohedge.com/article/history-worlds-reserve-currency-ancient...
oh, this one is backed... it's just not backed by what you want to have backing it, but it's most certainly backed...
Actually, and I might be wrong about this, I think this time may be different. Never in the course of human history, has so much been owed to so many, by so few. Should be fun.
As gold will be manipulated till they dont care anymore just like oil
Paper gold gets hammered. Not sure physical will follow
You'd have to find some first.
Paper does NOT cover rock, ROCK (gold) breaks EVERYTHING!
That was an analogous idea about 3-4 years and $10T ago.
I can't wait to see these margined on account, douche nozzles, that took their margined cash and re~levered it at 100-300:1 in the commodity and currency markets next week. Bitchez
Another round of QE.
Any resulting round of QE will probably include some sort of hair cut or dollar devaluation. The easy money days are coming to an end and now they need to take steps to protect the currency versus handing out free money.
Oil being the fuel for food in the modern world, and Gold the only real money, both are devalued.
Gold should be at $10,000/troy ounce and oil at $300/barrel.
The dislocations are caused by Central Bank funny money.
Agree completely.
Why? DREAM on.
Gold has a certain value for industrial use and limit in value for jewlery. Anything more is just speculative BS.
There is a tremendous amount of oil in the world. The cost of extraction is easily defined and newer technologies are driving the cost of extraction down. Oil only went sky high because of the monoloistc pricing of OPEC. OPEC's monoploy has been broken. OPEC memebership NEEDs the a minimial level of income and to many members hate or at least could care less about others members. It took a while but Amercan capitalism won out. Given enough incentive Americans figured out how to extract oil at reasonable prices and now American producers can export to Europe and Asia.
"The cost of extraction is easily defined and newer technologies are driving the cost of extraction down"
Well if zero % interest allows for the easy technologies, while fracking will waste what water is left while poisoning the water tables and eventually people, your on to something.
As for gold maybe you should read some history books about fiat vs gold. I think there is about 5000 years of history, you should start reading right away, and by the way I will buy all of the gold and silver you have hence it is a relic.
You know in the last 14 months the CDN $ has lost about 30% of it's purchasing power, but the gold at the bottom of the lake has retained it's purchasing power. Please under your thinking explain this to us all.
What are those funny marks in front of the numbers?
Depending on daily fluctuations, supplies/inventory, Aliens/Biblcal shit....
Oil should be 1/x oz Gold.
Gasoline should be 1/x oz Silver.
Etc.
I hope the governments around the world introduce negative interest rates. The economy needs rapid stimulation.
When they do I'll be taking out a loan for infinity dollars and paying off the principal with the interest.
Now I'm starting to scare the pinhead ZIRP ~ Mr. Yellen crew.
The new generation of useful idiots, because their parents were too deep in debt, or didn't take the time to teach their off-spring, to live within their means.
Darwinism at it's best
I think the royal family is going to suffer from a shit hemorrhage. This sometimes happens to dis-located assholes. We then should go in and help the surfs run the oil fields and charge them a fair share of the oil for our efforts.
Hillary Clinton elected president
Debt Jubillee. Reset.
and Mad Max (the original)
We have a Winner! Thank you everyone else for playing.
This is the death of the current fiat dollar system. The entire world has turned its back on the Cabal / US / UK / IL / KSA, etc, and is working feverishly with great sacrifice and injury to their own people and economies, to kill the Petro Dollar.
What's next is a global shift to asset backed currencies... in fact, all nations already have these, the Cabal / US are just refusing to play for now... backed by agreed on baskets of assets applicable and unique to each nation.
Gold / Silver / Oil / Land / Commodities /Minerals / Technology / Intellectual Property / Production Facilities / Transport Infrastructure / Labor / GDP will all be assets and increase in value / importance.
Every country will recalibrate not only the value of its currency, but also the cost of everything. It's inevitable, the world has decided, time to end US hegemony and these interminable bad ideas. How valuable something is locally or globally will depen on supply / demand.
this funny money is causing epic waste of natural resources. but then things are brought fwd and the end results are realized sooner...
just sayin, watch your step. land mines and swans...
I think Yellen shot the black swan and roasted it for dinner.
Apparently unlike pork, swan meat is kosher.
Keep picking up pennies and buying Gold.
Do we really need to predict where or what it will be ? Just get the fuck out of this casino while you can.
Do you have an bank account or mortgage? You're unwillingly in the casino.
Yesterday, I asked Bill if I could put his Friday newsletter into the public domain. Intersting read. - Eric Dubin
--------
GATA's Bill Murphy: Friday's "MIDAS" Newsletter Placed In Public Domain; "What THIS Is Leading To..."
http://thenewsdoctors.com/?p=585306
Simple. It means oil prices make no sense in terms of fundamentals. The question is not whether they will come back up but which exporter will blink and cut production first.
The other possibility---that gold is horribly overvalued---seems unlikely. Gold's price peaked in 2011 in USD terms, but most of the correction there was done by 2013. Whatever else gold is, it's a valuable raw material for manufacturing, especially high-tech. Growth in output of manufactured goods using gold as an input has slowed down at best. I'm not sure where the collapse in gold demand is supposed to come from.
So I don't know if you want to short gold. Definitely now is the time to go long oil, or sooner rather than later. Notice these spikes in gold/oil rarely last long---a year at most.
This time it is not gold that is spiking in relation to oil. This time it is oil collapsing meanwhile gold is at a bottom, coinciding with doulbing of gold/silver sales at both the CDN Mint and The US Mint, as well as Russia China and India gobbling up gold.
So this time I think it is different. (hmm where have I heard this before lol).
Those were all crisis of confidence; whenever confidence is lost, investment and consumption goes down. People look for for safe heavens, and gold is the most preferred. This chart just tells that, the level of distrust right now is the highest in history.
It would be interesting to juxtapose USD / oil ratio on this chart.
Rob Kirby explains it very well: https://m.youtube.com/watch?v=01k3bHSHRmM
I think they're artifically putting down gold AND oil to gain TITLE to as much as they can. Their goal has always been "to own the earth in fee-simple." It's the reason behind any multi-billion dollar merger. More control in few hands. It's not just the largest companies, but all of the companies that do business with them. InBev is a great example. Think of all the small suppliers that depend on doing business with InBev. The same with Wal-Mart. Sucks.