Gold isn't buying as much oil as it used to

[phantom power]

We compared the price of the Handy & Harman daily gold fix to the Platts' daily assessment of WTI. The question: how many barrels of WTI would an ounce of gold buy?

We started with last September, when the number was about 9 barrels per ounce. Beginning in January, the number soared, as the price of gold climbed and oil fell. By February 6, the number of barrels of oil that you could fetch with an ounce of gold had risen to 10.35.

The change since then has been remarkable, and it strongly undercuts the idea that the rise in the price of oil is simply a financial phenomenon. If gold is the ultimate storehouse of value and the currency of last resort, a commodity that is being driven primarily by currency factors should not be strengthening against that currency.

But as of last Friday, an ounce of gold could only buy 7.44 barrels of WTI, a strengthening of more than 23% since the February 6 alternate peak. The purchasing power of an ounce of gold has strengthened by almost one full barrel just since April 11.

With the gains in oil in Euro terms, and in gold terms; the fact that diesel has outperformed crude; and now with with the recent declines in production that we wrote about in this post , the case for fundamentals being in the driver's seat in this market is looking stronger every day.]

http://www.platts.com/weblog/oilblog/2008/04/gold_isnt_buying_as_much_oil_a.html

[kimmerspixelated]

1. I must be losing my mind..

er-or my glasses...cuz i thought you said GOD isn't buying as much oil as it used to!! Irony in that one!

[Demeter]

2. Of Course Not, Not at Those Prices!

[diane in sf]

3. Yes, but I refuse to buy oil or oil futures (other than for my current car).

[Zachstar]

4. This is REALLY BAD news.

Because Gold is better comparison and it is now directly showing the value of oil SKYROCKETING.

So the chances of oil recovering at or around 100 again are dropping fast.