woensdag 10 augustus 2016

GDP Vs. Oil

One obvious leading indicator for lower oil prices is GDP growth. When the economy suffers a recession with low GDP growth, demand for oil will diminish.

As the blue line goes down, so does the red line. 2015-2016 has seen a drop in GDP growth, so oil will not be doing well going forward. GDP is also correlated to oil production.

Note: this is also why gold and oil will not always go into the same direction. We can have a recession with oil going down, while gold will be a safe haven and go up in value (due to a higher misery/fear index). To bank on that outcome you could buy gold mining shares (lower oil production costs, higher gold revenue).

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