‘Buckle up!’ When oil and gold trade like this, it usually spells doom for the market

Oil prices CL.1, +0.53% are hovering around bear-market levels amid concerns over slowing global growth and the potential for tariffs to sap energy demand.

This combination of rising gold and falling crude — rare as to the extent of the divergence — has delivered to some nasty consequences for the broader market over the years, as you can see by this illustration:“Only three other times in history precious metals surged while oil plunged! All of them happened during severe bear markets and recessions,” he posted on Twitter TWTR, +4.76% this week. “Buckle up, folks.

“Gold-to-oil ratio surging, copper prices getting annihilated, corporate spreads widening, and credit markets screaming recession ahead,” he said. “The Fed’s utterly dovish comments just add to this list. Rate-cuts when late in the business cycle have never been a bullish sign. It reaffirms the many bearish macro signals we have been pointing out. Economic conditions are weakening in the face of asset bubbles everywhere.

While it’s been a tougher stretch for Crescat Capital in 2019, with the stock market rebounding to start the year, Chief Investment Officer Kevin Smith, who oversees $48 million, is confident the chips will start falling in his direction. The latest action in oil and gold isn’t hurting.

Sorry, now that the market is no longer controlled by fictional rules, you guys are going to figure out new trend identifiers. Might want to go back and review all that Supply/Demand stuff you read about thirty years ago in college.

Oooga booga.

😬

Unless you are long on oil and gold........

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