Thursday, September 3, 2009

Will Crude Oil Follow Gold Higher?

Gold continues to rally with an intraday high today of $999.50. Gold mining stocks have been outperforming the metal itself, most believe that miners are not as hedged now. I've mentioned previously on this blog, that $GOLD has traded ahead of crude oil $WTIC by 4 -6 months. Looking at the annotated chart I've posted tonight, you can see that the same breakout formation is developing in crude oil. That $75 price has been resistance. Now the run up to $140+ was speculative driven. BUT...with gold breaking out this week...does this possibly suggest crude oil ($WTIC) breaking out over $75 by January 2010??? Indeed, something that needs to be monitored. If so and gold meanwhile continues to climb, on momentum I may add, then now maybe the time to begin accumulating energy stocks? One reason I suggested RIG (or the OIH), back in early July for the Itz Pix portfolio.

*click on chart to expand


Robby said...

I honor your thesis that gold may be a leading indicator of crude in that it is a more direct measure of price inflation among commodities, but I feel compelled to add my two cents. Firstly, WTI spots and gold move in tandum because they are the two "psycho" resources, meaning their prices fluctuate more according to sentiment than actual fundamental analysis, and they move on many of the same cues from fear and over-exuberance. I don't follow gold enough to speculate, but if you look at crude inventories leveling in the 345 million barrel range (far above average) and the anecdotal evidence from the ISM Manufacturing Report actually debunked theories that fuel prices have begun to rise for commercial customers.

I enjoy your stuff and hope you'll check out some of mine ( Feel free to leave a comment.


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