While gold is going up on Iranian geopolitics, lack of overwhelming demand in crude oil shows deflation making economy shrink
Fred Day
Feb. 22, 2007

Oil and gold normally correlates very well. During economic inflation, gold and oil both go up rapidly in prices. This time gold is going up while oil is getting ready for collapse due to lack of global demand.

Gold is going up as Iran is very close to their final bid to enrich the Uranium. The fact that British troops are moving away from Basra is also significant. Gold is reacting to a possible Iran invasion.

The lack of global demand with excessive oversupply in the short term is the root cause for problems in crude oil price. Crude can soon test $50 a barrel. The gold can soon test $750 and ounce.

While gold is reacting geopolitics, oil is reacting to temporary oversupply. The deflation in the economy is affecting oil. The difference between the two will eventually correct itself. But for now watch Iran for gold and Russian and Canadian oil production for oil. India and China is the real drag on oil prices at this time. Demands in these countries can disappear all on a sudden as Governments exert their control over the economic expansion and inflation.

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READ MORE>>

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