Does oil prices going up and down effect value of GOLD in any way ? How does one determine when is the good time to buy stocks of companies who deal in gold and products and when to sell them.
2006-08-14 12:12:02 · 5 answers · asked by Salman Hashmi 3 in Business & Finance ➔ Investing
There is very little correlation between the price of oil and the price of gold. Both are driven by supply and demand. Gold stocks prices do correlate to the price of gold, so a good time to buy gold stocks is when you think gold is going higher, and a good time to sell them is when you think gold price will go down.
There is a much weaker correlation between the price of oil and the price of oil stocks (oil has doubled in price in the last year or so, but most oil stocks are up only a little).
2006-08-14 14:12:17 · answer #1 · answered by Michael K 6 · 0⤊ 1⤋
Yes and No.
Oil and gold trade independently. However, if you had really high oil prices, it might cause inflation which in theory should push gold bullion higher. You would need a substantial move in oil to see this effect in any case, not the $1-2 moves we see daily.
Oil, or more broadly, ENERGY prices (which are all related someway to oil) can impact how well GOLD COMPANY STOCKS are doing because mining for gold is an energy-intensive process. So if their costs go up, their profits go down, which doesn't help the company meet earnings expectations.
Since you don't appear to have much investing experience, I would stay away from buying gold directly as the minimum purchase is substantially - 25k, maybe 50k ...in that order of magnitude. You may be better off buying a gold or 'precious metals' fund that has singificant exposure to gold producer companies. When to buy? Stocks are getting cheaper right now but there's no great catalyst in the short-term as some concern exists regarding the health of the world economy - hte USDollar does well in these periods of uncertainty so gold gets stuck unless there's some really bad geopolitical/terrorist action. I'd also wait until the US central bank is now longer 'hawkish' (ie: not inclined to raise short term interest rates), as this tone from the central bank limits the upside in gold.
2006-08-14 14:20:43 · answer #2 · answered by lijon 2 · 0⤊ 1⤋
Yes oil affects the value of gold, a lot of things affect the value of gold.
Because the US dollar is weakening against many other economies the price of gold (and silver) of steadily been rising for the past 5 years.
You dont have to buy stocks to buy gold, you can buy precious metals independantly of stocks.
I dont invest in stocks, but I do buy gold and silver, and its the best thing I have ever done!
good luck!
2006-08-14 12:22:11 · answer #3 · answered by friskygimp 5 · 0⤊ 0⤋
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2006-08-14 17:26:54 · answer #4 · answered by stock_trade_expert 3 · 0⤊ 0⤋
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2016-10-02 02:14:39 · answer #5 · answered by ? 4 · 0⤊ 0⤋