Loading ...Chilling realization- Gold:Oil ratio
With the entire world shutting down, financial markets are grasping for data to determine what it will all mean. With governments trying to plug $trillion dollar holes with credit conjured out of thin air what does it mean?
We have had the panic now the downturn will follow. How severe? Well here is a chilling data point…The gold to oil ratio.
Keep in mind that gold is a financial metal. The price we assign to it is a measure of financial stress in the system. Oil is an industrial commodity (king of commodities) representing industrial activity.
Take a look at the below chart and think of what this means…
Note the peaks correspond with financial crisis…2008 GFC etc. We are so far beyond anything else in modern times. But wait let’s go back to 1933 when gold was $36/Oz and oil was $0.50bbl. Bingo same ratio as we se here today.
So this chart is indicating the same conditions which brought the world into the great depression
Have a nice day
Yes indeed. We are already in a global depression, hence the GOR at 1933 levels. But its likely to be worse this time, much much worse, as the GOR chart has a measured move potential to at least double what it is now.
What we are observing is a complete demolition of the global economy.
Correct and CNBC can only talk about how high this rally runs
Thank you both. As you may know, I’m a meteorologist, working in the world of emergency planning. As such, I have a feed of information from the UK civil contingency community. Around 6 to 8 weeks ago (I will never forget this), I opened an email which was being sent to those who would be planning the response to Coronavirus. The contents of the email became public knowledge in the days which followed. It contained the ‘planning assumptions’ and the ‘reasonable worst case’. This is effectively what we all had to prepare for. My wife happened to be stood next to me at the time, and asked me what was wrong when she saw my face. The colour had drained out of me, I had my head in my hands and I’m not ashamed to say, I shed a tear. I actually couldn’t speak for a few minutes, just shaking my head in disbelief. In that moment, I realised, all at once, that our world was about to change beyond anything anyone alive had ever seen.
The figures in the email detailed how, without complete lockdown for weeks (probably months) we would see up to 80% of our population infected with a 1 to 2% mortality rate. That equates to between half a million and a million deaths. The UK is a small country. On a global scale it would be beyond devastating, with higher death rates in poorer countries with little healthcare provision.
I brought my perspective to the Tent (carefully, because I’m unable to discuss such things openly at the time and mass panic doesn’t help anyone).
I tried to paint a picture of GLOBAL shutdown for months (knowing that it was coming without any doubt). I still find it hard to get my head around the fact that this has come to pass during my lifetime.
This is not a recession. This is a devastating depression on a scale few seem to comprehend (yet). This is the end of the old world as we knew it. All any of us can do is try to stay safe, protect our loved ones as best we can and hope/pray that something better rises from the ashes.
That email, and what it foretold will haunt me till the day I die.
Oil is up to $27 this morning
Up 35% from the $20 bottom
Fill er up
This brings back memories of 1980-1981. At the time, I was thinking that it was the end of the world as we know it.
Back then, there were a couple of key reasons why the economy did recover eventually.
The amount of debt (government, corporate, and personal) was not terribly excessive, and interest rates were very high with room to lower them.
This time is different.