In the last year or so we have seen oil crash and in the last day or so another crude oil price drop has made its presence known. There are no daily trading limits in commodities and it is the main reason why oil has made such huge price dips.
The decline is not finished just yet as I expect more downside to come. The Gold/Oil ratio is flashing and today the Gold/Oil ratio is the second cheapest ratio in two years.
The Gold/Oil ratio sits at 29.42 today matched only once in the last two years! This is a fast ratio move and I would like to see this ratio continue to spread in the short term. I trade the Forex oil units and have made some small good short bets, but the Gold/Oil ratio is sending a signal that we may have to reverse all our bearish thoughts as we will end up in a crude oil bear trap sooner or later.
Gold soaring, oil crashing changes the Gold/Oil ratio quickly so if we ignore it we can find ourselves in a crude oil bear trap and won’t have a clue that it is happening.
Oil might have another small degree, 3-4-5 wave count, to play out, but after that, a bullish oil move could surprise us.
Gold investors are jumping on the gold bandwagon as they think it will protect them from the savage stock market gyrations. Short term it will work but long term investors know that gold can reverse with little warning. I think there is more upside as a 5 wave sequence in Minor degree seems to have started.
Many may think that the gold bottom of late 2015 ($1050) is a major bottom but in Primary degree. We are not in a Cycle degree bullish phase so eventually, I will turn very bearish.
I have seen some EWI gold wave counts a few months back and we have the same “A” wave bottom in Primary degree.
This is very rare but they have a huge following reading their newsletters and when EWI turns bearish all of their subscribers will know it.
I’m still very bullish on gold and it may last all year or until stocks have crashed significantly. For now, this gold bullish phase should continue, so enjoy it as all trends eventually come to an end.
Silver has come back from the “Dead” and has been soaring with a great spike being formed right now. I believe there is more silver upside, but the corrections can scare even the most bullish traders. This could be part of a 5 wave Minor degree sequence, which also makes it a “C” wave bull market.
I have about 6 silver long positions which I got in a little late but I have no intention of selling just yet. I find no use in using the outdated Gold/Silver ratio as they are both used as metal currencies.
I don’t see any group of analysts that use silver as a base to calculate all other ratios with.
Silver is also part of the “Energy Metals” group as it is used in solar cell production. Silver might not slow down until we reach wave 3-4 in Minor degree so be prepared for a wild ride.