Gold to Oil ratio is telling a different story

The Gold to Oil ratio is at its lowest since November 2014.

That aside, whenever this ratio falls (especially below its long term average) the S&P 500 rises.

It tells us the health of the economy is OK.

Whenever it rises, the S&P 500 is stifled and often declines.

Today, there is anomaly.

The debate I’ll work through in figuring out this distortion is…..we have higher oil prices which may not be due to more demand, but rather less supply and gold isn’t acting in a historical manner when inflation appears.

And then, on the healthy part of the economy side of the ledger, we continue to see solid and rising S&P 500 consensus earnings estimates.

June 14, 2022

by Rob Zdravevski

rob@karriasset.com.au