Should you go long Oil and short Gold? I took a look at the daily and weekly GOLD continuous contract vs Oil and here’s what I found:
Strength has alternated between Gold out performing Oil then Oil outperforming Gold. When the daily chart goes up Gold is outperforming Oil. The Daily chart shows the PPO about ready to crossover and this is the forth bottom in the 13 area. Result: Be long Gold, Short Oil!
The weekly chart shows the strength in Gold versus Oil from June, 2008 to February, 2009 when Gold fell from $989 to $681 and back to $900, but oil fell from $147 to $40.
From May, 2009 to the present Gold has gone from $859 to $1,226 and Oil from $60 to $84. Bottom line: I don’t see any reason to short Gold and this does not appear the time to choose Oil over Gold
commodity trading pattern used to be flip flop speculation on long and short. peak/average ratios between these two commodities in 08 and 09 were almost identical. if you have perfect timing on market, i.e. long or short on exact turnaround point, both made +200% return, but still underperformed comparing with those financial stocks during price recovery which had almost average of +300% return, auto sector like Ford in this year did extremely well, +1100% gain… but nothing is gonna to be go up forever for sure.