In the beginning of the commodity bull market gold outperformed oil. The Fed started cutting at the beginning of 01 and the gold bull market got underway. It quickly reached a peak of 1 oz. of gold buying about 15 barrels of oil. From there things turned in favor of oil for the next 3 1/2 years. In 05 one oz. of gold would buy only about 6 barrels of oil. Since Sept. of 05 though the advantage has swung back to gold. After correcting for the first half of the year I think gold is now ready to resume it's out performance. During the commodity run so far oil is up in the neighborhood of 700% while gold is only up a little less than 200%. It's about time gold makes up for lost ground. For gold to catch up to oil it will need to rise to $2000. I have no doubt that gold will do just that over time and probably much more. Silver would need to go to $32. However silver is the most undervalued commodity and at some point the market will recognize this and I expect silver to increase much more than 700%. I think 2000-3000% is probably more realistic for silver. Hence my constant harping on silver :)
Gold Miners - What next?
5 months ago