The Coming Oil Collapse Could Be Bullish for Gold Stocks

Gold keeps running despite the strength in the US dollar. Oil is looking shaky and could collapse below USD$70. A spike in the gold/oil ratio could put a rocket under gold stocks and Murray shows you why.
The gold rally continues to defy US dollar strength.
Meanwhile, oil prices are looking ready to plummet further.
The price of oil is one of the biggest costs of gold producers.
So, when oil prices fall, so do gold producers’ costs…and their margins rise.
Simple, really.
But it’s why the gold sector could rally further than most expect.
Some smaller gold developers still lag the larger producers.
But watch this space — a rising gold/oil ratio should ignite the animal spirits in investors to chase those stocks higher.

Trumps ‘drill baby drill’ goals as well as his pressure on Saudi Arabia to open their spigots could drive down the oil price further.
Brent crude has held above US$70 for over two years now. I reckon the next test of that level could see a dramatic break lower in the price.
That should see the gold/oil ratio spiking even higher, even faster. If history is anything to go by, that could set a fire under the gold sector.
In today’s Closing Bell video, I look at long-term moves in the price of gold compared to the US Dollar Index…then the bearish set up in oil prices.
I also compare the gold/oil ratio to the Canadian and Australian gold sectors. That will show you how often a rising gold/oil ratio has preceded big jumps in gold stocks.
So, if you are holding gold and wondering when to take profits, or you are eyeing off a small developer wondering whether to jump in, this Closing Bell is for you.
Regards,
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Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps
All advice is general advice and has not taken into account your personal circumstances.
Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Murray Dawes is our resident expert trader and portfolio manager. He is a former Sydney Futures Exchange floor trader who went on to design custom trading systems and strategies for ultra-wealthy clients (including one of Australia’s richest families). Today, his mission is to help ordinary Aussie investors make profitable investments, while expertly managing risk.
He uses his proprietary system for his more conversative and longer-term-focused service Retirement Trader…and then applies the same system to the ultra-speculative end of the Australian market in Fat Tail Microcaps (this service is strictly limited and via invitation only).