The Gold Oil Relationship <br />3 Theories<br />www.goldratefortoday.org<br />
Gold Scams: Three Types<br />Is there a correlation between oil and gold? <br />Three arguments:<br />First, a direct caus...
Gold Scams: Three Types<br />First, a direct causal relationship<br />One possible argument goes that a high oil price is ...
Gold Scams: Three Types<br />Such a scenario could be observed end of the 1970s when the oil cartel reduced the output of ...
Gold Scams: Three Types<br />Second, impact of oil on shares of gold companies <br />Another line of thinking sees an inve...
Gold Scams: Three Types<br />Third, gold and oil prices are driven by a common factor<br />Both, gold and oil are traded i...
Gold Scams: Three Types<br />It can be argued that the prices of both commodities have a similar trend is not because one ...
Gold Scams: Three Types<br />This third theory is a reminder that correlation, meaning a similar pattern, does not necessa...
Gold Scams: Three Types<br />Or, as the third argument goes, a common factor that influences the rates of both commodities...
Visit my blog:<br />www.GoldRateForToday.org<br />Live Gold Rates, <br />Independent Trading Advise <br />and many Resourc...
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Gold Oil Relationship: 3 Theories

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Is there a correlation between oil and gold? The first idea suggests a direct causal relationship, the second argument proposes an impact of oil on shares of gold companies, and lastly a theory argues that the gold and oil prices are driven by a common factor ...

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Transcript of "Gold Oil Relationship: 3 Theories"

  1. 1. The Gold Oil Relationship <br />3 Theories<br />www.goldratefortoday.org<br />
  2. 2. Gold Scams: Three Types<br />Is there a correlation between oil and gold? <br />Three arguments:<br />First, a direct causal relationship <br />Second, impact of oil on shares of gold companies <br />Third, gold and oil prices are driven by a common factor<br />www.goldratefortoday.org<br />
  3. 3. Gold Scams: Three Types<br />First, a direct causal relationship<br />One possible argument goes that a high oil price is bad for the economy, dampening growth and dragging down share prices <br />As a consequence, investors look for alternative assets, such gold <br />Thus, the oil price indirectly affects the price for gold <br />www.goldratefortoday.org<br />
  4. 4. Gold Scams: Three Types<br />Such a scenario could be observed end of the 1970s when the oil cartel reduced the output of oil, so that its price surged <br />This sent shockwaves through the U.S. and global economy and resulted in the long recession of the 1970s <br />www.goldratefortoday.org<br />
  5. 5. Gold Scams: Three Types<br />Second, impact of oil on shares of gold companies <br />Another line of thinking sees an inverse causation between the oil price and share prices of gold mining companies<br />Expensive oil makes gold extraction more expensive and therefore minimizes the profit margin of gold mines<br />This is because a big portion of mine expenses are related to energy (oil) prices<br />www.goldratefortoday.org<br />
  6. 6. Gold Scams: Three Types<br />Third, gold and oil prices are driven by a common factor<br />Both, gold and oil are traded in the U.S. dollar. Therefore, its price hinges on the strength of this currency<br />What is a sign of the strength (or weakness) of a currency?<br />It’s inflation rate<br />www.goldratefortoday.org<br />
  7. 7. Gold Scams: Three Types<br />It can be argued that the prices of both commodities have a similar trend is not because one influences the other, but because their price is driven by a common factor<br />And this is the inflation rate<br />www.goldratefortoday.org<br />
  8. 8. Gold Scams: Three Types<br />This third theory is a reminder that correlation, meaning a similar pattern, does not necessarily imply causation<br />One explanation might be indeed causation: The oil price influences directly the gold rate<br />Another possibility is an indirect relationship, with another factor sitting in the middle<br />www.goldratefortoday.org<br />
  9. 9. Gold Scams: Three Types<br />Or, as the third argument goes, a common factor that influences the rates of both commodities<br />It can even become more complicated, if the relationship is not stable over time<br />Say, in the 1970s the oil price might have had a much bigger influence on gold than it is now<br />www.goldratefortoday.org<br />
  10. 10. Visit my blog:<br />www.GoldRateForToday.org<br />Live Gold Rates, <br />Independent Trading Advise <br />and many Resources <br />about Gold Investing<br />Interested in More?<br />www.goldratefortoday.org<br />
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