That's not to say the ratio couldn't go higher, it might, but on balance it's looking grim for gold you have to admit, if you apply the gold/oil ratio. The ratio is at its highest for about 25 years which means it's more likely to correct downwards.
If gold reached its 2011 high the ratio would be an unheard of, off the chart 43, very unlikely.
I've been 100% assured many times here that gold will never see $1000 again, and only yesterday that gold will never, ever, ever get to $600.
I've got a book here which was compiled in 2011 and published in 2012 assessing gold as being in a huge bubble which was about to pop, and all the reasons why. The author was of course, correct.
It examines the Elliot Wave Theory and the author says:
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Applying the EW target, gold prices should drop to and find support near the $1000 - $1200 range, to wave 2 of the extension. However, if the entire move since 1999 has been a 5th wave of a larger wave count dating back to 1968, prices may drop to the low of wave 2 of our larger 5th wave (starting in 1999) - a much steeper plunge to the low of $252.80 an ounce.
Moreover, the existence of a speculative bubble in gold makes the upcoming price collapse much more dangerous. Since the implosion of a bubble tends to drag prices down even below long-term averages, as panicked investors overreact to the downside, we can forecast prices to drop to levels near gold's long-term mean ($500 to $700) and below.
Prices don't collapse and bottom out in a straight-downwards move though. Once a peak is reached, prices will fall sharply in spurts and bursts; but there are many ups and downs along the way. The ups and downs may be opportunities for experienced or expert traders to buy and sell. But the most important thing to remember is; once the bubble pops, the trend is down.
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