http://www.financialsense.com/fsu/ed...

The gold/oil ratio is shown below, with accompanying stochastics, displaying a value of 7.40, up from last week’s value of 6.59, suggestive that it about to embark on a journey to the historical ratio value of 21. Should oil remain at $140/barrel, then gold would be $2940/ounce. If oil goes to $300/barrel (which is a strong possibility with Peak Oil kicking in), then it goes to $6300/ounce. If the financial crisis reaches the epic proportion I expect it to, the ratio could spike to 35, which would lead to $10,500/ounce. The above examples should be clear cut as to why it is important to at least own gold and silver bullion, alongside high quality junior stocks.

Figure 7

The gold/HUI ratio is shown below, with accompanying stochastics, displaying a present value of 2.19. I am going to get a longer-term chart of this ratio in the coming weeks to assess optimal times to buy and sell the HUI based upon the ratio (I am sure this already exists out there, but it is a new concept to me). If anything, the ratio rising to present levels is highly suggestive that a reversal to the 1.65 area is not far off…this suggests the HUI is about to go ballistic once the present corrective structure is complete.