Oil and Gold Price Relationship

8/3/2019 Oil and Gold Price Relationship

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Oil and Gold Price

Relationship

Dr. sherko Soltanpanahi

[email protected]


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Crude oil prices behave much as any other commodity

with wide price swings in times of shortage or oversupply.

The crude oil price cycle may extend over several years

responding to changes in demand as well as supply

Oil price is a leader of capital market

Oil is a major input of most products

Oil is determiner of price of other commodities

OIL

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OIL

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Top 10 Gold producing and consuming countries

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The consumption of gold produced in the world:in jewelry:50%investments:40%industry:10%

India is the world's largest single consumer of gold, asIndians buy about 25% of the world's gold, purchasing

approximately 800 tones of gold every year, mostly forjewelry.

India is also the largest importer of gold; in 2008,India imported around 400 tones of gold


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Top 10 Gold producing and consuming countries

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Top Gold producers

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Top 10 Gold producing and consuming 2010

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Source : IMF


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Top 10 Gold producing and consuming 2010

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Rank Country Proved reserves (B.B) 2010 Share of total,2011

1 Saudi Arabia 259.9 17.7%

2 Venezuela 99.4 14.4%

3 Canada 175.2 11.9%

4 Iran 137.6 9.3%

5 Iraq 115.0 7.8%

6 Kuwait* 101.5 6.9%

7 United Arab Emirates 97.8 6.7%

8 Russia 60.0 4.1%

9 Libya 44.3 3.2%

10 Nigeria 37.2 2.5%

21 India 5.6 0.4%

World total 1,354.2

Total OPEC 951.3 72.5%

http://petroleuminsights.blogspot.com/


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Oil Exporters, Consumers, and Importers, 2006 (M.B/D)

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Producers production

1. Saudi Arabia 10.72

2. Russia 9.67

3. United States 8.37

4. Iran 4.12

5. Mexico 3.71

6. China 3.84

7. Canada 3.23

8. U.A.E 2.94

9. Venezuela 2.81

10. Norway 2.79

11. Kuwait 2.67

12. Nigeria 2.44

13. Brazil 2.16

14.Iraq 2.01


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Producers production Exporters Net exports

1. Saudi Arabia 10.72 1. Saudi Arabia 8.65

2. Russia 9.67 2. Russia 6.57

3. United States 8.37 3. Norway 2.54

4. Iran 4.12 4. Iran 2.52

5. Mexico 3.71 5. U.A.E 2.52

6. China 3.84 6. Venezuela 2.20

7. Canada 3.23 7. Kuwait 2.15

8. U.A.E 2.94 8. Nigeria 2.15

9. Venezuela 2.81 9. Algeria 1.85

10. Norway 2.79 10. Mexico 1.68

11. Kuwait 2.67 11. Libya 1.52

12. Nigeria 2.44 12. Iraq 1.43

13. Brazil 2.16 13. Angola 1.36

14.Iraq 2.01 14. Kazakhstan 1.11


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Producers production Exporters Net exports Consumers consumption

1. Saudi Arabia 10.72 1. Saudi Arabia 8.65 1. United States 20.59

2. Russia 9.67 2. Russia 6.57 2. China 7.27

3. United States 8.37 3. Norway 2.54 3. Japan 5.22

4. Iran 4.12 4. Iran 2.52 4. Russia 3.10

5. Mexico 3.71 5. U.A.E 2.52 5. Germany 2.63

6. China 3.84 6. Venezuela 2.20 6. India 2.53

7. Canada 3.23 7. Kuwait 2.15 7. Canada 2.22

8. U.A.E 2.94 8. Nigeria 2.15 8. Brazil 2.12

9. Venezuela 2.81 9. Algeria 1.85 9. South Korea 2.12

10. Norway 2.79 10. Mexico 1.68 10. Saudi Arabia 2.07

11. Kuwait 2.67 11. Libya 1.52 11. Mexico 2.03

12. Nigeria 2.44 12. Iraq 1.43 12. France 1.97

13. Brazil 2.16 13. Angola 1.36 13. U.K 1.82

14.Iraq 2.01 14. Kazakhstan 1.11 14. Italy 1.71


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Producers production Exporters Net exports Consumers consumption Importers Net imports

1. Saudi Arabia 10.72 1. Saudi Arabia 8.65 1. United States 20.59 1. United States 12.22

2. Russia 9.67 2. Russia 6.57 2. China 7.27 2. Japan 5.10

3. United States 8.37 3. Norway 2.54 3. Japan 5.22 3. China 3.44

4. Iran 4.12 4. Iran 2.52 4. Russia 3.10 4. Germany 2.48

5. Mexico 3.71 5. U.A.E 2.52 5. Germany 2.63 5. South Korea 2.15

6. China 3.84 6. Venezuela 2.20 6. India 2.53 6. France 1.89

7. Canada 3.23 7. Kuwait 2.15 7. Canada 2.22 7. India 1.69

8. U.A.E 2.94 8. Nigeria 2.15 8. Brazil 2.12 8. Italy 1.56

9. Venezuela 2.81 9. Algeria 1.85 9. South Korea 2.12 9. Spain 1.56

10. Norway 2.79 10. Mexico 1.68 10. Saudi Arabia 2.07 10. Taiwan 0.94

11. Kuwait 2.67 11. Libya 1.52 11. Mexico 2.03

12. Nigeria 2.44 12. Iraq 1.43 12. France 1.97

13. Brazil 2.16 13. Angola 1.36 13. U.K 1.82

14.Iraq 2.01 14. Kazakhstan 1.11 14. Italy 1.71

Source:

Energy Information Administration (EIA)


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World economics situation (industrialization,Globalization, etc) Growth rate of major consumers (China, India, etc)

Total Oil StocksTotal Oil Reserved (USA Oil Reserved)Regional and International conflicts (middle east)Seasonal climate condition (winter)Policies of producers and consumers (OPEC,Germany, USA)Price of other energy recourses (Natural Gas,Nuclear power)Extraction and marketing costs (insurance)

Factors of Oil Price

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Crude Oil Priceyear ($ us. per B)

1946 1.63

1947 2.16

1948 2.77

1949 2.77

1950 2.77

1951 2.77

1952 2.771953 2.92

1954 2.99

1955 2.93

1956 2.94

1957 3.14

1959 3.00

1960 2.91

1961 2.85

1962 2.85

1963 2.91

1964 3.00

1965 3.01 14


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Crude Oil Priceyear ($ us. per B) year ($ us. per B)

1946 1.63 1966 3.1

1947 2.16 1967 3.12

1948 2.77 1968 3.18

1949 2.77 1969 3.32

1950 2.77 1970 3.39

1951 2.77 1971 3.6

1952 2.77 1972 3.61953 2.92 1973 4.75

1954 2.99 1974 9.35

1955 2.93 1975 12.21

1956 2.94 1976 13.1

1957 3.14 1977 13.4

1959 3.00 1978 13.08

1960 2.91 1979 25.1

1961 2.85 1980 37.42

1962 2.85 1981 35.75

1963 2.91 1982 31.83

1964 3.00 1983 29.08

1965 3.01 1984 28.75 15


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Crude Oil Priceyear ($ us. per B) year ($ us. per B) year ($ us. per B)

1946 1.63 1966 3.1 1985 26.92

1947 2.16 1967 3.12 1986 14.44

1948 2.77 1968 3.18 1987 17.75

1949 2.77 1969 3.32 1988 14.87

1950 2.77 1970 3.39 1989 13.58

1951 2.77 1971 3.6 1990 18.91

1952 2.77 1972 3.6 1991 24.721953 2.92 1973 4.75 1992 16.22

1954 2.99 1974 9.35 1993 14.70

1955 2.93 1975 12.21 1994 12.37

1956 2.94 1976 13.1 1995 16.63

1957 3.14 1977 13.4 1996 19.61

1959 3.00 1978 13.08 1997 17.80

1960 2.91 1979 25.1 1999 17.12

1961 2.85 1980 37.42 2000 27.07

1962 2.85 1981 35.75 2001 22.72

1963 2.91 1982 31.83 2002 23.47

1964 3.00 1983 29.08 2003 27.1

1965 3.01 1984 28.75 2004 30.90 16


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Crude Oil Priceyear ($ us. per B) year ($ us. per B) year ($ us. per B) year ($ us. per B)

1946 1.63 1966 3.1 1985 26.92 2005 49.86

1947 2.16 1967 3.12 1986 14.44 2006 60.31

1948 2.77 1968 3.18 1987 17.75 2007 69.18

1949 2.77 1969 3.32 1988 14.87 2008 82.40

1950 2.77 1970 3.39 1989 13.58 2009 60.06

1951 2.77 1971 3.6 1990 18.91 2010 77.678

1952 2.77 1972 3.6 1991 24.72 2011 108.481953 2.92 1973 4.75 1992 16.22

1954 2.99 1974 9.35 1993 14.70

1955 2.93 1975 12.21 1994 12.37

1956 2.94 1976 13.1 1995 16.63

1957 3.14 1977 13.4 1996 19.61

1959 3.00 1978 13.08 1997 17.80

1960 2.91 1979 25.1 1999 17.12

1961 2.85 1980 37.42 2000 27.07

1962 2.85 1981 35.75 2001 22.72

1963 2.91 1982 31.83 2002 23.47

1964 3.00 1983 29.08 2003 27.11965 3.01 1984 28.75 2004 30.90 17


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Contd,


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Contd,

U.S. Pricecontrols

Iran/Iraq War

Oil Embargo

Iranian

Revolution

Asian GrowthWeaker $

Series of OPEC Cuts 4.2

Million Barrels

Asian CrisisOPEC 10% Quota Increase

Gulf War

Recession9/11

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Factors Gold Price

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-Total Gold reserved- Markets Uncertainty-Inflation rate-Capital markets situation-Economics condition (Recession or Boom)-Value of USA dollar

-Oil price-Policies of Major Gold producers-Extraction costs


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Gold Priceyear

($ us. per

Ounce)

1946 34.71

1947 34.71

1948 34.71

1949 31.69

1950 34.72

1951 34.72

1952 34.601953 34.84

1954 35.04

1955 35.03

1956 34.99

1957 34.95

1959 35.10

1960 35.10

1961 35.27

1962 35.25

1963 35.23

196435.09

1965 35.1021


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Gold Priceyear

($ us. per

Ounce)year

($ us. per

Ounce)

1946 34.71 1966 35.131947 34.71 1967 34.95

1948 34.71 1968 39.31

1949 31.69 1969 41.28

1950 34.72 1970 36.02

1951 34.72 1971 40.62

1952 34.60 1972 58.421953 34.84 1973 97.39

1954 35.04 1974 154.00

1955 35.03 1975 160.86

1956 34.99 1976 124.74

1957 34.95 1977 147.84

1959 35.10 1978 193.40

1960 35.10 1979 306.00

1961 35.27 1980 615.00

1962 35.25 1981 460.00

1963 35.23 1982 376.00

196435.09

1983424.00

1965 35.10 1984 361.00 22


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Gold Priceyear

($ us. per

Ounce)year

($ us. per

Ounce)year

($ us. per

Once)

1946 34.71 1966 35.13 1985 317.001947 34.71 1967 34.95 1986 368.00

1948 34.71 1968 39.31 1987 447.00

1949 31.69 1969 41.28 1988 437.00

1950 34.72 1970 36.02 1989 381.00

1951 34.72 1971 40.62 1990 383.51

1952 34.60 1972 58.42 1991 362.001953 34.84 1973 97.39 1992 343.82

1954 35.04 1974 154.00 1993 359.77

1955 35.03 1975 160.86 1994 384.00

1956 34.99 1976 124.74 1995 383.79

1957 34.95 1977 147.84 1996 387.81

1959 35.10 1978 193.40 1997 331.02

1960 35.10 1979 306.00 1999 294.24

1961 35.27 1980 615.00 2000 278.98

1962 35.25 1981 460.00 2001 279.11

1963 35.23 1982 376.00 2002 271.04

196435.09

1983424.00

2003309.73

1965 35.10 1984 361.00 2004 263.38 23


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Gold Priceyear

($ us. per

Ounce)year

($ us. per

Ounce)year

($ us. per

Once)year

$ us. per

Ounce)

1946 34.71 1966 35.13 1985 317.00 2005 444.741947 34.71 1967 34.95 1986 368.00 2006 603.46

1948 34.71 1968 39.31 1987 447.00 2007 695.39

1949 31.69 1969 41.28 1988 437.00 2008 871.96

1950 34.72 1970 36.02 1989 381.00 2009 972.35

1951 34.72 1971 40.62 1990 383.51 2010 1224.53

1952 34.60 1972 58.42 1991 362.00 2011 1403.081953 34.84 1973 97.39 1992 343.82

1954 35.04 1974 154.00 1993 359.77

1955 35.03 1975 160.86 1994 384.00

1956 34.99 1976 124.74 1995 383.79

1957 34.95 1977 147.84 1996 387.81

1959 35.10 1978 193.40 1997 331.02

1960 35.10 1979 306.00 1999 294.24

1961 35.27 1980 615.00 2000 278.98

1962 35.25 1981 460.00 2001 279.11

1963 35.23 1982 376.00 2002 271.04

196435.09

1983424.00

2003309.73

1965 35.10 1984 361.00 2004 263.38

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Gold Price

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Gold Price

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Contd,

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Relationship between Oilprice

and Gold price

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Gold price as a Dependent variableModel Summary

Model R R Square Adjusted R Square Std. Error

1 .942a .887 .886 96.79907

a. Predictors: (Constant), OIL

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 4727833.691 1 4727833.691 504.568 .000a

Residual 599683.803 64 9370.059

Total 5327517.494 65

a. Predictors: (Constant), OIL b. Dependent Variable: GOLD

Coefficientsa

Model

Unstandardized Coefficients S. Coefficients

t Sig.B Std. Error Beta

1 (Constant)37.985 15.676 2.423 .018

OIL 12.279 .547 .942 22.463 .000

a. Dependent Variable: GOLD

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Oilprice as a Dependent variableModel Summary

Model R R Square Adjusted R Square Std. Error

1 .942a .887 .886 7.42619

a. Predictors: (Constant), GOLD

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 27826.084 1 27826.084 504.568 .000a

Residual 3529.492 64 55.148

Total 31355.577 65

a. Predictors: (Constant), GOLD b. Dependent Variable: OIL

Coefficientsa

Model

Unstandardized Coefficients S.Coefficients


1 (Constant) -.648 1.254 -.516 .607

GOLD .072 .003 .942 22.463 .000

a. Dependent Variable: OIL

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Relationship between Oilprice and Gold price

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Contd,

Coefficientsa

Model

Unstandardized Coefficients S. Coefficients


1 (Constant)-.648 1.254 -.516 .607

GOLD .072 .003 .942 22.463 .000

a. Dependent Variable: OIL

Coefficientsa

Model

Unstandardized Coefficients S.Coefficients


1 (Constant)37.985 15.676 2.423 .018

OIL 12.279 .547 .942 22.463 .000

a. Dependent Variable: GOLD

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Oil price

Relationship between Gold and Oil Price

Shares value in share markets

Cost of production

Price of goods and services

Inflation rate

Gold demand Gold price


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The easiest way to eliminate inflation is to express the

two prices as a ratio.

How many barrels of oil you can buy with an ounce of

gold:Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)

The gold-oil ratio helps us to identify overbought and

oversold opportunities for gold.

The Gold-Oil Ratio


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Buying opportunities (for gold):when the gold-oil ratio turns up at/below 10 barrels/ounce.Selling opportunities:

when the gold-oil ratio turns down at/above 20 barrels/ounce.

The Gold-Oil Ratio


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Oil price and old price have same determiner factors

Oil price and Gold price have direct relationship

Oil price has is one of major cause of gold priceUsually Gold price has not

How many barrels of oil you can buy with an ounce of

gold:Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)

The gold-oil ratio helps us to identify overbought and

oversold opportunities for gold.

The Gold-Oil Ratio


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Thank you

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Gold jewelry along with gold bullions has always played a veryimportant role in the cultural heritage of Indian people.Gold is an indication of wealth and social ranking among variouslayers of Indian society.

Its really hard to imagine any Indian wedding or ceremony withoutwomen and men adorned in exquisite gold jewelry. source: http://www.goldbullionpro.com

Top 10 Factors Affecting Gold Price in India


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1. Historical high demand.2. Rising or lowering import costs and gold mine resource shortages.

Currently theres only one working gold mine in India called Kolar3. Rising population.4. low bank deposit interest rates leads to gold investment

5. The value of the US dollar.When the dollar is weak, the spot price of goldis on the rise and vice versa.

6. Worlds gold supply. depleting mineral deposits, the prices for gold willsoar in the world.

7. Favorable or unfavorable Government gold policy8. Inflation. Indians prefer to buy gold jewelry or gold bullions to protect

themselves from devaluation.9. India is a country of contrasts. Poorer layers of population prefer to keeptheir valuable assets in the form of gold so it can be easily carried in timesof distress, floods and social unrest.

10. Worlds overall economic situation. huge state budget deficits, in EUmultiple investors see gold as the only worthy commodity worth investing..

Top 10 Factors Affecting Gold Price in India

source: http://www.goldbullionpro.com


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Documents

Oil and Gold Price Relationship