I was listening to a macro podcast this morning (Equitile Conversations) and they were deep-diving into why energy is actually leading the S&P so far this year.
They brought up a stat that kind of blew my mind: One ounce of gold currently buys ~80 barrels of oil. Apparently, the historical average is closer to 20:1, and every time the ratio has broken 30:1 in the past, oil has returned something like 30%+ over the next year.
Source: Gypsy_tantrum
4 Comments
Is it undervalued?
You can dig up millions of these kinds of relationships by cherry-picking the past. You need an actual causal reason for thinking this **and**, since we’re talking about financial markets, why no one else knows this and has already priced it in.
Oil is priced the same as a melting tub of ice cream.
Becomes a little less valuable everyday.