RE:RE:RE:RE:RE:Oil is cheap compared to gold Jay....yeah I have always had trouble deciding on whether gold is cheap or not. By and large, the demand for gold relates to it being a store of value as opposed to having any real demand for it. Oil in some ways is the same in terms of the paper trading as this relates to the future price, interest rates and storage costs but in the final analysis, the price still depends on how much is consumed compared to how much is produced.
So frankly, I don't know if gold is cheap or not. But based on my previous post, it would seem to me that it is more likely for the price of gold to drop than for oil prices to drop in order for the gold/oil ratio to move back to the long term mean. My reasoning is that to move from the current ratio to the mean, the price of oil would have to drop about 40%. Despite my long term view of oil demand and pricing, this in my view is highly unlikely.