Black against yellow gold

It now takes 61 barrels of oil to buy one ounce of gold, one of the highest ratios in history. This extreme level reflects both the strength of gold and the weakness of oil prices. Over the last 40 years, such a peak was only reached once, during the Covid pandemic in 2020, when oil briefly turned negative.

Today, gold is soaring due to the debasement trade, while crude prices have fallen from USD 120 in Q1 2022 to USD 61 currently — the result of weaker global demand, now easing geopolitical tensions in the Middle East, and rising supply from both OPEC and non-OPEC producers.

For equity investors, this may be a good moment to revisit oil stocks. TotalEnergies for example, which we hold in our European Value Fund, for example trades at 9.3x forward earnings and offers a 6.1% dividend yield.

Note: This publication is intended solely for informational and illustrative purposes and does not constitute investment advice or a recommendation to buy or sell any security.