Datastream
A Historical Divide: A 160-Year View of the Gold-Oil Ratio
The Briefing
- The divergence had gold trading at nearly 91 times oil in April.
- The price relationship between gold and oil is at levels not witnessed in 160 years.
A 160 Year View of the Gold-Oil Ratio
2020 has ushered in a new era of prices for two historically significant assets—gold and oil.
The market has driven the pair in polar opposite directions breaking historical patterns. This year, gold brushed above $2,000 an ounce, while oil futures even went temporarily negative in the spring. The gold-oil ratio tells us how many barrels of West Texas Intermediate (WTI) are needed to buy an ounce of gold, serving as a price-based indicator of the relative value of these two important assets.
Historically, the ratio has averaged between 10:1 and 30:1, This year it brushed above 90:1.
Here’s a look at the price of gold and oil over the last 6 months:
| Month | Gold-Oil Ratio | Gold $ per Oz | Oil $ per Barrel (WTI) |
|---|---|---|---|
| April 2020 | 91.12 | $1,716.75 | $18.84 |
| May 2020 | 48.62 | $1,725.65 | $35.49 |
| June 2020 | 45.09 | $1,770.70 | $39.27 |
| July 2020 | 48.96 | $1,971.68 | $40.27 |
| August 2020 | 46.25 | $1,970.50 | $42.61 |
| September 2020 | 47.09 | $1,893.90 | $40.22 |
| October 2020 | 52.53 | $1,879.90 | $35.79 |
The Gold Story
Traditional investing mantra tells us gold acts as an alternative investment, a haven if you will, that appreciates in price during tumultuous economic and financial times.
Its limited quantity and physical storage properties serve as a hedge to much of modern finance that is increasingly digital.
The COVID-19 pandemic, a subsequent slowdown in economic activity, and the debt-driven stimulus packages by governments globally are all factors in the recent gold rally.
The Oil Story
At the other end are the oil markets, which face both long and short-term headwinds. Long-term demand for oil has dwindled gradually as societies buff up their alternative and green energy initiatives.
Shrinking activity during the pandemic was the short-term shock. Combined, the outcomes include oil futures going negative in spring, Chevron reporting a net income loss of $8.3 billion in the second quarter, and Exxon’s dumping from The Dow.
As markets adapt to the volatile nature of 2020, only time will tell what the future holds for the gold-oil ratio.
Where does this data come from?
- Source: Goehring & Rozencwajg: Top Reasons to Consider Oil-Related Equities report and MacroTrends
- Notes: Data is as of October 2020.
Datastream
Charting the Rise of Cross-Border Money Transfers (2015-2023)
With over 280 million immigrants transferring billions of dollars annually, the remittance industry has become more valuable than ever.
The Briefing
- 79% of remittance payments in 2022 were made to low and middle-income countries.
- Borderless, low-cost money transfer services like those provided by Wise can help immigrants support their families.
The Rise of Cross-Border Money Transfers
The remittance industry has experienced consistent growth recently, solidifying its position as a key component of the global financial landscape. Defined as the transfer of money from one country to another, usually to support a dependent, remittances play a pivotal role in providing food, healthcare, and education.
In this graphic, sponsored by Scottish Mortgage, we delve into the growth of the remittance industry, and the key factors propelling its success.
Powered by Immigration
With over 280 million immigrants worldwide, the remittance industry has an important place in our global society.
By exporting billions of dollars annually back to their starting nations, immigrants can greatly improve the livelihoods of their families and communities.
This is particularly true for low and middle-income countries, who in 2022 received, on average, 79% of remittance payments, according to Knomad, an initiative of the World Bank.
| Year | Low/Middle Income (US$ Billion) | World Total (US$ Billion) |
|---|---|---|
| 2015 | $447B | $602B |
| 2016 | $440B | $596B |
| 2017 | $477B | $638B |
| 2018 | $524B | $694B |
| 2019 | $546B | $722B |
| 2020 | $542B | $711B |
| 2021 | $597B | $781B |
| 2022 | $626B | $794B |
| 2023 | $639B | $815B |
India is one of the global leaders in receiving remittance payments. In 2022 alone, over $100 billion in remittances were sent to India, supporting many families.
Enter Wise
As the global remittance industry continues to grow, it is important to acknowledge the role played by innovative money transfer operators like Wise.
With an inclusive, user-centric platform and competitive exchange rates, Wise makes it easy and cost-effective for millions of individuals to send money home, worldwide.
Connection Without Borders
But Wise doesn’t just offer remittance solutions, the company offers a host of account services and a payment infrastructure that has helped over 6.1 million active customers move over $30 billion in the first quarter of 2023 alone.
Want to invest in transformative companies like Wise?
Discover Scottish Mortgage Investment Trust, a portfolio of some of the world’s most exciting growth companies.
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