Yes I was buying oil around 47, mainly because the gold to oil ratio is around the 26 mark, so I have decided to get into just the long side of the spread, will only consider short gold if 1137 is broken, indicating a mean reversion is taking place and both commodities will trade lower over the medium to longer term.
Another reason I am reluctant to short gold is its recent relative strength to the USD.
The USD has been crushing everything in its path, so you would expect USD gold to be well below 1137 and closer to 1000, particularly considering how bad gold sentiment has been, the gold permabears have been saying a move to USD new highs would be the death knoll to take gold down to 800.
To be honest I am very surprised gold has held support, and to me it looks bullish.
The USD is very overbought, and any sell off in USD will support USD priced commodites very well.
So at this point you can say that I expect the gold to oil ratio to normalise over the next 18 months, and that oil will outperform gold as long as gold remains above 1137.
I will continue to gradually accumulate below 47 and when I eventually get a long signal on my weekly oil chart, I will add more however it may be at higher levels once I have confirmation that momentum is shifting to a bullish phase.
