HardAssetsInvestor

Written by Brad Zigler  |

October 17, 2008

Gold Approaches Record; Makes New Highs

Details

That headline isn't a typo. Provided you have the right perspective, that is. To make sense of this, you've got to first look at the crude oil market.

Crude oil closed near session lows yesterday as mention of the "R" word (recession) was raised above the whisper level. Yesterday's flat Consumer Price Index has even got average Joes (Six-Pack or Plumber, take your pick) thinking inflation has peaked.

Gold fell as well, but even the yellow metal's decline couldn't put the brakes on the ascent of the gold/oil ratio, now within spitting distance of the quotient's January 2007 peak. We've looked at the ratio and its import in columns (most recently, "A Chart From Our Anxiety Closet") and podcasts (see "Zigler Looks At The Gold/Oil Ratio").

 

Gold/Oil Ratio

 

If gold couldn't score a new record against oil yesterday, it made up for it in its performance against gold mining stocks. The price ratio of the SPDR Gold Shares trust (NYSE Arca: GLD) to the Market Vectors Gold Miners ETF (AMEX: GDX) rocketed above 3.5 as investors left a trail of mining certificates in their wake on their way to the exits.

 

Gold/Gold Stocks Ratio

 

Who said gold was done making new highs?