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Strategies & Market Trends : Value Investing

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From: E_K_S	8/17/2011 1:59:30 PM
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Is Oil undervalued OR Gold overvalued? With Gold trading at an all time high of $1,790/Oz., it's interesting to look at the historical range of the No. of barrels of Oil that 1 oz of Gold will buy. *At today's price Gold can buy 21 barrels of Oil.* Historically the number s/b around 15. That makes Gold overvalued by 30% or Oil undervalued by 30%. Therefore crude oil should sell at between $113/barrel - $120.00/barrel Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel) incrediblecharts.com The gold-oil ratio helps us to identify overbought and oversold opportunities for gold. The chart below shows solid support between 8 and 10 barrels/ounce of gold over the last 30 years, with occasional spikes carrying above 20 but seldom holding for any length of time. Gold-Oil Ratio (Note: this chart only goes through 2006 but provides a good historical view back to 1973) I have used my "Clownbucks" and added to several of my Foreign E&P Oil companies including SUNDANCE ENERGY (Other OTC: SDCJF.PK) and ANTARES ENERGY LTD (Other OTC: AZZEF.PK). I also averaged down and bought more Lucas Energy, Inc. Common Stock (AMEX: LEI). finance.yahoo.com EKS

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