Gold and oil ready to diverge in price trends – what does that mean for stock market and economy?
Marla Guthrie
Mar. 14, 2007

The gold prices are trending higher while oil is trading almost 25% below its all time high. The trend in gold price is up but for oil it is down. Normally both can be used as the inflation hedges. But when they diverge they do that for reasons well beyond normal commodity cycles.

Oil is trending lower because of lower demand with constant supplies. Gold is trending higher because of possible financial meltdown in the coming months or years. The geopolitical environment is a factor but a very minor factor. As a matter of Iran nuke issue is making oil go up than that in gold.

The divergence in oil and gold price trend manifests the start of new era – the era of deflation. The effects are severe on the money supply, stock market and the economy in general.

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