when will oil and gold decouple?

[jk]

Re: when will oil and gold decouple?

Ah yes - but we have the unfolding 'terminal American debt and inflationary fiat currency crisis - that one's still got 75% of the tread left on the tire - good for miles and miles and miles and miles.

i'm up between 3 and 4% ytd, focusing on what i focus on. how you doin'?

[GRG55]

Re: when will oil and gold decouple?

i am quite skeptical of the "decoupling" that's been hypothesized for global equity markets: the idea that asia and em's will somehow hold up in the face of a u.s. recession. however, there is another decoupling i think may be in our future, and i would be interested in others' thoughts on this issue.

i think we are in a recession which will worsen over the next 6 months at least. as the evidence of recession deepens, i expect deflation fears to re-emerge, as they did during the last recession. in the setting of global slowing, i would think that industrial commodities - metals and energy - will sell off. my question/thought- can gold decouple from oil?

we have seen charts showing that the rise in the price of oil has been a money illusion- in gold terms, oil has been flat for a long time. but in a recession/deflation scare energy demand will drop. some investors, however, will look beyond the valley to the monetary stimulus still in the pipeline, and buy gold.

this same phenomenon is happening now. as evidence of economic slowing comes in, equities drop and gold goes up. it was not so long ago that gold and equities seemed to track together- now they have decoupled, with the same dynamic. that is, gold is seeing the monetary stimulus still to come in response to signs of recession.

so when will oil go down, reflecting its relationship to economic activity? and if slowing is severe enough to indeed drop the price of oil, will gold still see further into the future, and decouple from oil? or will the deflation scare be severe enough to drop the price of gold, and provide the last big buying opportunity before gold takes off once more?

Ref the highlighted items above:

• I am equally sceptical of the global equity decoupling thesis;
• If deflation fears re-emerge, why would anything but cash (in select currencies) be of interest? Would a deflation scare not be the catalyst for the next major correction in gold?
• I don't have the same confidence that there's been a secular decoupling of gold and equities. Many parties looking for an inflation hedge may still prefer equities or commodities such as oil over gold at this stage of the game, and for some time to come. Seems to me there is a reasonable chance for an "all assets down" move, leaving only the currencies of the current account surplus nations as a hiding place in the event of a deflation scare.

[jk]

Re: when will oil and gold decouple?

Ref the highlighted items above:

• I am equally sceptical of the global equity decoupling thesis;
• If deflation fears re-emerge, why would anything but cash (in select currencies) be of interest? Would a deflation scare not be the catalyst for the next major correction in gold?
• I don't have the same confidence that there's been a secular decoupling of gold and equities. Many parties looking for an inflation hedge may still prefer equities or commodities such as oil over gold at this stage of the game, and for some time to come. Seems to me there is a reasonable chance for an "all assets down" move, leaving only the currencies of the current account surplus nations as a hiding place in the event of a deflation scare.

that's what i was wondering:

or will the deflation scare be severe enough to drop the price of gold, and provide the last big buying opportunity before gold takes off once more?

we are seeing mixtures of symptoms of deflation and inflation. [in bipolar disorder there can be something called a "mixed state" in which there co-exist symptoms of mania and depression, simultaneously]. i could imagine a deflation scare in which, nonetheless, gold held up because there were enough skeptics about deflation, [or believers in the governments' powers to pump more money, depending on how you want to say it]. a worse deflation scare would drop gold along with everything else, and provide a great buying opportunity [unless eric is wrong and mish and prechter are right].

[Guest]

Re: when will oil and gold decouple?

This thread is unclear on the semantic issue. Is 'when will it decouple' referring to a trading opportunity (much more likely given the overwhelming preferences among iTulipers who watch/analyze short term moves with great enthusiasm)?

Or was the question attempting to establish whether gold and oil have moved in some kind of observable tandem for decades? If that was the question, spending a lot of effort on questioning the linkage evident in the chart below is a task which may provide an uncertain dividend?

It does not take much investigation to ascertain gold has a lot of catch up to do. So there's your potential 'decouple'. But what was the original question - a mere trading insight, or an investigation into the fundamental linkage?

[jk]

Re: when will oil and gold decouple?

This thread is unclear on the semantic issue. Is 'when will it decouple' referring to a trading opportunity (much more likely given the overwhelming preferences among iTulipers who watch/analyze short term moves with great enthusiasm)?

Or was the question attempting to establish whether gold and oil have moved in some kind of observable tandem for decades? If that was the question, spending a lot of effort on questioning the linkage evident in the chart below is a task which may provide an uncertain dividend?

It does not take much investigation to ascertain gold has a lot of catch up to do. So there's your potential 'decouple'. But what was the original question - a mere trading insight, or an investigation into the fundamental linkage?

a mere trading insight. i don't there's anything fundamental to examine. gold is essentially useless except for making trinkets, but enough people think that it has value for it to have value as a medium of exchange and store of value. so i'm 30% invested in the useless stuff. oil, on the other hand, has a multitude of uses. so what fundamental relationship could there be, except in the minds of men?

[The Outback Oracle]

Re: when will oil and gold decouple?

a mere trading insight. i don't there's anything fundamental to examine. gold is essentially useless except for making trinkets, but enough people think that it has value for it to have value as a medium of exchange and store of value. so i'm 30% invested in the useless stuff. oil, on the other hand, has a multitude of uses. so what fundamental relationship could there be, except in the minds of men?

Sorry I can contribute little to the technical debate here...just give me the answer eh!!!!
There was an old Western...was it McKenna's gold...Gregory Peck says...
If all the world were made of Gold,
Men would kill each other for a handfull of dust!

[raja]

Re: when will oil and gold decouple?

• Seems to me there is a reasonable chance for an "all assets down" move, leaving only the currencies of the current account surplus nations as a hiding place in the event of a deflation scare.

GRG55,

What are those currencies?


Thanks

[metalman]

Re: when will oil and gold decouple?

i am quite skeptical of the "decoupling" that's been hypothesized for global equity markets: the idea that asia and em's will somehow hold up in the face of a u.s. recession. however, there is another decoupling i think may be in our future, and i would be interested in others' thoughts on this issue.

i think we are in a recession which will worsen over the next 6 months at least. as the evidence of recession deepens, i expect deflation fears to re-emerge, as they did during the last recession. in the setting of global slowing, i would think that industrial commodities - metals and energy - will sell off. my question/thought- can gold decouple from oil?

what, you been reading itulip or something? you kill me, dude. "i think we're in recession" and "i expect deflation fears to re-emerge, as they did during the last recession." why not just say "itulip said a year ago we'd be in a recession now and ka-poom theory says deflation fears should emerge soon"? that's how i think about it. am i right?

we have seen charts showing that the rise in the price of oil has been a money illusion- in gold terms, oil has been flat for a long time. but in a recession/deflation scare energy demand will drop. some investors, however, will look beyond the valley to the monetary stimulus still in the pipeline, and buy gold.

ka-poom says demand falls but dollar demand falls faster. pure and simple. now we're "there". so do we still believe it?

this same phenomenon is happening now. as evidence of economic slowing comes in, equities drop and gold goes up. it was not so long ago that gold and equities seemed to track together- now they have decoupled, with the same dynamic. that is, gold is seeing the monetary stimulus still to come in response to signs of recession.

yep. it this the inflation fake-out that fucked the japanese? they raised rates deep into the debt deflation only to find that the inflation they thought they were battling was a lagger of the asset bubble. then years later they found they'd kicked off a deflationary impulse they could not fight. check out this battle between i'm guessing fred and karl over at http://www.tickerforum.org/cgi-ticke...www?post=22030.

so when will oil go down, reflecting its relationship to economic activity? and if slowing is severe enough to indeed drop the price of oil, will gold still see further into the future, and decouple from oil? or will the deflation scare be severe enough to drop the price of gold, and provide the last big buying opportunity before gold takes off once more?

great question. the big one for guys like you and me with a pile of pms. so far i'm shocked that gold has waited until the 9 mo. into the debt deflation to start to take off. i'm waiting to hear more from ej re the flow of money thing he's into to explain what's going happening. i worry that the same dynamic that head faked the boj is faking out the pm markets. they are expecting inflation, and it may lag then... KAAAAAAAA!

[Guest]

Re: when will oil and gold decouple?

i'm up between 3 and 4% ytd, focusing on what i focus on. how you doin'?

I'm up 12% YTD JK (total assets gain/loss) but I'm not obsessing about it. I could be down net 20% in 3 months very, very easily. So what? Track ones net worth or ones investing returns a half-dozen times a year and even that much will drive the soundest of us completely barmy. I can see that happening to one or two around here already.

[Jim Nickerson]

Re: when will oil and gold decouple?

I'm up 12% YTD JK (total assets gain/loss) but I'm not obsessing about it. I could be down net 20% in 3 months very, very easily. So what? Track ones net worth or ones investing returns a half-dozen times a year and even that much will drive the soundest of us completely barmy. I can see that happening to one or two around here already.

Luke, it strikes me that you are given to hyperbole.

[Guest]

Re: when will oil and gold decouple?

Luke, it strikes me that you are given to hyperbole.

Jim, if it walked up to you and shook you by the hand you might still not recognise it. You have been down this path before with statements of mine. Stop obsessing about financial returns before it eats you up. My returns are high (and can just as easily be equally low) because I take very concentrated positions. Figure it out.

There must be more to life than financial returns, no? (??? :confused: :confused: )

[Jim Nickerson]

Re: when will oil and gold decouple?

Jim, if it walked up to you and shook you by the hand you might still not recognise it. You have been down this path before with statements of mine. Stop obsessing about financial returns before it eats you up. My returns are high (and can just as easily be equally low) because I take very concentrated positions. Figure it out.

There must be more to life than financial returns, no? (??? :confused: :confused: )

NOOOOOOOOOOOOOOOOO,

[metalman]

Re: when will oil and gold decouple?

Jim, if it walked up to you and shook you by the hand you might still not recognise it. You have been down this path before with statements of mine. Stop obsessing about financial returns before it eats you up. My returns are high (and can just as easily be equally low) because I take very concentrated positions. Figure it out.

There must be more to life than financial returns, no? (??? :confused: :confused: )

you're barking up the wrong tree, dude. you might as well ask jim to watch this video as ask him that,

[Jim Nickerson]

Re: when will oil and gold decouple?

you're barking up the wrong tree, dude. you might as well ask jim to watch this video as ask him that,

Ain't watching no video that ain't got no descriptive dialogue with it.

[metalman]

Re: when will oil and gold decouple?

Ain't watching no video that ain't got no descriptive dialogue with it.

ok, i'll give you a hint. purple dinosaur... it's a JOKE. ha, ha.