The FX implications of the gold-oil ratio
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The gold-oil ratio currently stands at 8.7 – off its all-time low of 6.7 in August, but still well below its 35-year average of 15.0. A rebound in the ratio is increasingly inevitable, however, particularly given the current market landscape in interest rates, the US dollar and economic growth.
Ever since dollar-gold convertibility was suspended in 1973, there have been five notable occasions in which the gold-oil ratio reached bottom, three to six months after which led to a drop in 10- to two
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