WASHINGTON, D.C., (PRWEB) December 14, 2005
Big Idea Investor (http://www.bigideainvestor.com/), a free weekly newsletter focused on uncovering big investment trends and opportunities, today provided subscribers with a report on the correlation between the price of gold and oil and the investment opportunities that exist today.
Get Big Idea Investor's complete December 14th issue with our take on the huge investment opportunity that has been created as a result of the discrepancy between the price of an ounce of gold and a barrel of oil on a historical basis. Just click here now:
The price of gold bullion and crude oil are highly correlated, and over the past 60 years, one ounce of gold has on average purchased 15.2 barrels of oil. With gold trading at around $525 per ounce and crude oil trading at $59, this ratio today stands at 8.9 today.
The price of gold has not been sitting out the commodity rally through. It's up nearly 13% in the last month, and 21% in the last year. In spite of gold's recent gains, the ratio remains out of whack, and near an all time low of 6.6 set back in August of this year (recent appreciation of gold and declines in the price of oil have set the ratio moving back toward the historical balance).
With oil unlikely to decline below $50 anytime soon, the price of gold is likely to rally in the coming years - and in a big way. Historical data shows that when the ratio falls below 11 (meaning one ounce of gold will buy you 11 barrels of oil), the ratio not only will come back in line with the average, but that speculation drives the ratio above the historical average of 15.2, as has been evidenced every time that the ratio fell below 11.
Big Idea Investor Publisher Ian Wyatt wrote, "Let's assume that the price of crude oil falls to $50 per barrel. Using the historical 60 year average ratio of 15.2 barrels of oil per ounce of gold, this would mean that the price of gold would move from $525 per ounce to $760, an increase of 45%. Assuming the ratio moves above 15.2 on over speculation in the gold market in the coming years, and we could easily be looking at $900 or even +$1,000 per ounce of gold."
For investors looking to gain exposure to the yellow metal, it has never been easier to get into gold.
In late November, gold began trading as an electronically traded fund, or ETF, and can be purchased just like a regular stock. The ETF is StreetTracks Gold Trust (NYSE: GLD), which is run by the World Gold Counsel and marketed by State Street and had investments of $550 million in its first day of trading - an indication that investors are warming up to the idea of buying gold. The fund purchases gold and is designed to track the price of gold. Shares trade at 10% the price of an ounce of gold, and were recently trading at $52.33.
You can view the complete December 14th issue with our article on the price relationship between an ounce of gold and a barrel of oil at BigIdeaInvestor.com by clicking here:
You can also signup for a free weekly membership to Big Idea Investor by clicking here now:
About Big Idea Investor
Big Idea Investor is a free weekly email newsletter advisory that features insights on the market, stock picks, and big picture views on investments from our team of newsletter editors and market experts. The Big Idea Investor is an outstanding complimentary publication that provides investors with access to information from our investment advisors unavailable elsewhere.
The Big Idea Investor aims to educate individual investors by providing them with a wide variety of investment approaches and opinions from our various contributors, including the editors of Growth Report, Rising Star Stocks, and Supernova Stocks, with stock picks and investment strategies from the editors of each. Big Idea Investor's weekly email and web newsletter includes content from Growth Report and Rising Star Stocks' Editor Ian Wyatt, Growth Report Market Columnist Peter Henig, Supernova Stocks Editors Charles Norton and Allen Gillespie, and contributing writer Vijay Balkissoon.
For more information on Big Idea Investor, visit http://www.bigideainvestor.com/
For more information on Business Financial Publishing, visit http://www.bfpublishing.com/
Contact: Vijay Balkissoon