CL vs. Gold and NG

Discussion in 'Commodity Futures' started by runningman, Jun 22, 2007.

  1. So the historical relationship between gold and crude oil is that an ounce of gold will usually buy about 15 barrels of oil. Using this math right now, it gives us a price of about $43 per barrel. A barrel of oil is about 5.8 Million BTUs or should be about 5.8x the price of NG approx. 5.8*NG right now gives us about a $41 barrel of oil. These spreads seem at very stretched levels. What are your thoughts on this spread coming in in the next 6 months? What would your opinion on a long gold, short 2 oil, long NG trade right now to play the spread coming in?
  2. I don't think that analysis is correct, industry rely on oil not gold. gold is mostly used at a method to store value.
  3. here is an old article on the gold - oil relationship

    you might just want to try the crude - nat gas spread

    but using QM and QG ( mini contracts )

    and adjust accordingly

    just be careful

    as the history books are littered with traders and the spreads that crushed them

    good luck

    ps I think the CL - NG spread was even wider late last yr