Why Gold Could Jump $100 in One Day
Jul 2nd, 2008 | By Brian Hunt | Category: Gold MarketWe are sounding a “trading alert” in today’s column. The alert is cheap gold… dirt-cheap gold.
Gold and oil respond similarly to inflationary pressures… so the two tend to trade in a “range” together. Over the past 25 years, one ounce of gold has bought, on average, 15 barrels of oil. When an ounce of gold can buy 20 barrels of oil, it’s expensive and due for a fall. When an ounce of gold can buy less than eight barrels of oil, it’s cheap and due for a rise.
Right now, an ounce of gold buys you just 6.5 barrels of oil – less than half its traditional purchasing power. As you can see from today’s chart, the “rubber band” is pulled extremely tight.
There’s no guarantee this trade will work out quickly. But it’s worth keeping on the radar. If oil stubbornly refuses to correct from its levels above $140, gold could easily pop up to $1,000 and beyond in just a few days.
Source: Why Gold Could Jump $100 in One Day
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