Long gold and short oil ratio trade
The guest highlighted the long gold, short oil trade as a highly effective expression of the ongoing global monetary and geopolitical transition.
The argument
Groman noted that the gold-to-oil ratio has expanded from 22 barrels per ounce in 2017 to 61 barrels per ounce, reflecting structural shifts where gold outperforms energy as a monetary asset.
The thesis, stress-tested
✓ What validates it
- ✓The gold-to-oil ratio breaking to new all-time highs above 61 barrels per ounce
- ✓GDX continuing to outperform broader equity and energy indices
▸ Risks discussed
- ▸A massive supply shock in oil that drives crude prices rapidly higher
- ▸A cyclical deflationary shock that temporarily depresses gold relative to energy
Hear it yourself
"In a nutshell, the trade's long gold, short oil. You know, that day, gold to oil ratio was 22 barrels an ounce. Today, it's 61 barrels an ounce all time high. GDX Gold Miners, which is a proxy for gold to oil ratio, was $22 at 73 today."
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