In our last post we provided an updated snapshot of commodity performance in 2016. With gold up big and oil down big, we decided to look at the ratio between the price of an ounce of gold and a barrel of oil. Below is a chart of this gold/oil ratio since 1983. When the line is rising, gold is outperforming oil and vice versa. As shown, the collapse in oil and bounce back in gold has caused the ratio to go parabolic recently to its highest level ever. What this means, we’re not really sure, but it’s interesting nonetheless.
The second chart below is also notable. It shows the rolling 50-day correlation between the price moves (daily % change) in gold and oil. When the line is falling, the two are becoming less correlated and vice versa for a rising line. As shown, the correlation between gold and oil over the last 50 trading days stands at -0.31, which is the most negatively correlated they have been over a 50-trading day period since 1997.