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CNBC/Sam Meredith/7-14-2020
“’The oil-gold ratio has historically been a poor indicator of future oil prices,’ Morgan Stanley’s Martijn Rats and Amy Sergeant said in a research note published Monday. ‘However, it is interesting at its extremes.’ Crude futures tend to be supported during periods of high inflation, while gold is traditionally used as a hedge against inflation. This positive correlation has often meant higher oil prices have coincided with higher gold prices, although one does not directly impact the other.”
USAGOLD note: As the chart below shows, we were at an extreme at 91 barrels per ounce in March. Things have calmed since then with the ratio now at 45:1. Morgan Stanley sees “the backdrop” as bullish for oil.
Chart courtesy of MacroTrends.net