Guess the chart

Discussion in 'Educational Resources' started by Pekelo, Apr 12, 2007.

  1. Pekelo


    I thought we should increase the fun level of ET with a spice of education thrown in. So here we can post charts and others have to guess and show how smart they are. Charts don't have to present stocks, but it has to do with the economy.

    For a start here is a chart. It is the relationship between 2 important things, and expresses an interesting relationship:

  2. andread


    Good idea, I've been thinking about starting a thread like this for a while. I'm very curious to see how good people are.

    I would also like to encourage people to suggest some information they would like to see on the charts. For example, I think that candlesticks (or OHLC) and volume would be helpful.

    I will also make my guess: it's going up
  3. Pekelo


    I don't know where it goes. If the last 35 years keep repeating itself, it should come back to the mean. That is what's interesting about it, that although with wild swings, in 35 years, it always went back to the mean, so the ratio between these 2 things stayed unchanged in the long run.

    The years with the spikes should be good clues...
  4. andread


    Sorry, I thought that by "guess the chart" you meant "guess where it is going".
    If it's an important relationship the first thing I would think of is something related to the P/E ratio, but it doesn't look like.
    Okay, there is a big spike in 1990, maybe for the gulf war? Something related to oil?
  5. Oil to Gold??

  6. andread


    Yes, I would tend to agree. But it's most likely something related to oil anyway
  7. Pekelo



    It is the Price of oil in gold. So it shows that although in dollars oilprice keeps rising through the decades, if we measure it in something else, the relationship has been rather unchanged, well discounting the swings...

    "In order to examine the question of the value of oil apart from the value of the dollar, we need to factor the dollar out of the equation. One way is to look at the price of oil denominated in gold. The above chart does just this. It shows the price of a barrel of oil, 1970 to date, not in dollars, but in ounces of gold. Over this entire time frame, the price of oil has barely budged. In dollars, it went from $3.35 to $53.40, up by a factor of 16. In gold, it went from 0.965 ounces to 0.840 ounces - a slight decline."

    "What most people miss when they talk about oil prices is that there is not one, but two, commodities involved. When we quote an oil price in dollars, we are not talking merely about the value of the oil, but also the value of the dollars. "Dollars per barrel" is a ratio - a ratio of the value of the oil to the value of the dollar. Therefore, any analysis that purports to divine the course of that ratio must take into account not merely the supply and demand factors for the oil, but of the dollars as well."