With oil prices at record levels, the only way is to go for the gold.
For better or for worse Gold and its oil partners are inextricably linked to the sticky business with a well-defined set of each other after the second world war. As oil prices rise, more regular and the gold price below.
Like all marriages, there are bound to be ups and downs. The symmetry is undeniable gold and oil is sometimes interrupted, but the recent boomThis product provides an indication of the future direction of gold, widely regarded as the last refuge of the investments in times of economic uncertainty.
Gold, the most precious metal precious has a long history to look back, as a store of value, many thousands of years.
Oil has become one of the world's most valuable assets, since the techniques to refine the crude oil have been developed in the mid-1850. If a biological process from the equation,increases almost anything at hand, which will be operated by oil in motion, and the demand for IT.
Like the more expensive oil is driving up prices for energy, flows of money also for the safety of gold as a hedge against inflation. It 'just that their importance for civilization, this Beauty and the Beast even closer together in partnership Century 21 Advanced. The closer correlation between the rising price of gold and oil provides the answer to the future direction of goldPrices.
Inflation is the greatest danger lurks in the shadows to replace the global economy, the credit crisis as the biggest threat to economic stability. Inflation, or more worryingly, 1970-style stagflation threatens to derail the recovery in the economy of the United Kingdom and the United States and Europe, governments seem unable to stop it.
Close attention from the uncomfortable collaborations are emerging economies and the rest of the world to the opposite movementDirections. The blame for the current price of oil has made emerging markets India and China - is racing ahead while Europe and the U.S. are flat-lining. Or at least that's received the opinion - the insatiable appetite for oil to fuel growth in these countries for extended unit prices of world oil supplies through its ability to provide responsible. The truth is much more complex.
Oil has recently risen above $ 130 a barrel - as unthinkable as recentlycompared to 2007. But demand was slowing down the cooling of global growth. Let's look again at China and India. Already in 2004 the demand for oil high in these countries themselves, which rise to projections that there indefinitely. At that time, oil was relatively cheap at about $ 38 per barrel. Now, in 2008, the same argument is still pushing the idea that somehow eating the emerging markets are not stacked with the world oil supply.
The Chinese economy has certainly hadrapid growth in recent years rapidly to 10.4 percent of GDP in 2006. This level of growth has slowed in recent years with the World Bank, with a decline of 8.7 percent of GDP in 2008. The Chinese economy remains dangerously close to overheating, inflation expected to reach 10 percent this year and the government are tightening fiscal policy as a result.
India too is facing the same pressure on inflation, the central bank already tightened monetary policy. GDP expected to slowfrom 8.5% to 8% this year, softening global demand for their exports.
The economies of India and China are still growing rapidly, but not as fast as they were. And 'safe to assume, therefore, that the supply of oil will be sufficient to meet current demand in the two Asian giants. While growth in these emerging markets is a factor, it is not the only factor.
The rise in inflation has reduced consumer demand for gold in India by half, as consumers wait for prices to fall moreaffordable level. This was part of a development that saw the fall of the global consumer demand for gold, but the price of one ounce of rose to a record level in March. So, with much gold and oil already in the system, because prices rise, demand falls when the truth?
Speculative demand for oil and gold goes some way to explain this year's hike in prices. But this is not the only factor that is a perfect storm of political and economic factors threaten the world oil crisis quickly,similar, which has seen since 1970. First there is the threat to supply. Attention to events in Africa to take advantage of opportunities with investors, if the supply is threatened by oil and gold concentrates. For gold, it comes with problems of electricity in the gold mines of South Africa, while in West Africa, has been fueled by militant attacks on pipelines in Nigeria surges in oil this year.
Another factor is the growing tension between the U.S. andIran and, more recently, Venezuela. The two countries are major thorns in the side of the United State Government. The leaders of both countries to blame OPEC, the U.S. dollar for oil prices. Venezuelan President Hugo Chavez has gone so far as to blame "for the fall of the American." While President Bush was engaged in negotiations with the regime less hostile to Saudi Arabia, hoping to increase oil production by Iran and Venezuela have said the offer was inadequate. That can be goodcoincides with the news that Saudi Arabia has increased its production, Iran currently has 20 tankers full of floating oil, and that number will probably increase.
Breaks with the possibility of hostilities between the U.S. and Iran in armed conflict, the possibility of further increases in oil this year are high. This would be seriously bad news at the pump with the price of gasoline and diesel results quickly.
More expensive energy action for global growth as inflation rises slowly andGovernments consider tax policy, hoping to control inflation. Hope can not come from the election of Barack Obama and, possibly, soften the hard line the Bush administration pursued. Until that happens, expect gold and oil prices continue at record levels this year are increasingly a nightmare scenario of $ 200 per barrel most likely. If this happens, gold will be held as a hedge against inflation by registrationHigh.
The long-term average gold oil ratio of 15 barrels of oil per ounce of gold. An ounce of gold at current prices will buy about 7 barrels of oil. With oil moving inexorably toward $ 140 a barrel this week, this makes a strong case for investing in gold right now.
By Brett Tudor
