Crude Oil / Gold rally imminent

I believe Crude Oil could be setting up for its most explosive rally in history!

A week ago, the Gold/Oil ratio hit a high of 26, the highest it has been since 1999... meaning that Oil was the cheapest it has been in terms of real money for the past decade!

Last week... priced in Dollars we saw Oil prices gain about 11% while Gold dipped 5%, and the Gold/Oil ratio now stands at 21. It is clear to me that a major breakout in Oil is beginning to take place.

Historically, the Gold/Oil ratio has always come back to 10 and last year it hit a low of 7. However, because I believe we are about to see a run on the U.S. Dollar and a rush into Gold, it is my thinking that Gold could deserve a large monetary premium over Oil and it is possible that the Gold/Oil ratio will only return to 15.

A return to a Gold/Oil ratio of 15 means Oil could rise from its current price of $44.76 per barrel, up to about $62.79 per barrel, which would be a 40% gain in the price of Oil.

However, because I believe Gold is soon going to $1,500 to $2,000 per ounce, it wouldn't surprise me to see Oil once again reach $100 to $133 per barrel in 2009.

The world's oil reserves that have been discovered are declining at a rate of 6.7% per year so unless a huge amount of new Oil is soon discovered, in 15 years there won't be any Oil left at any price.

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Jonathan Lebed
Lebed.biz
Staff