The Bull Market in Oil and Gold-How Do They Compare?

Both black and yellow gold are on a tear. Everyone knows that. I was able to dig up some interesting facts on the size of these two markets, and maybe give more support to the theory that Gold buying in the Middle East might be more of a reason for the Gold move than previously thought.

Yahoo has a very nice page called Industry Browser where you can see the relative size (market cap) of the Sector/Industry stocks as a whole. See it here. You can dig down deeper and the categories give you more and detail. Oil and Gold fall in the Basic Materials Category.

The Gold Market is $198B in all. The Oil majors are $1.3 Trillion alone, and if you include other oil sector related stocks like drilling and exploration, servicing, etc. you realize that the Oil Market is about $2 Trillion in size. That's 10 times as big as the Gold Market.

If the Middle East is buying Gold, you realize that it doesn't take much of their newly generated wealth to move the Gold Market quite a bit. The sheer amount of money being made by major oil companies (a volatile issue in the United States. Congress, Senate are all over Oil executives. Bush sides with the Executives...It's a fair market and no extra taxes for the Oil Companies. See a story here, for example) tells you the power of these profits. Note than Aramco, the Saudi Oil Giant, is bigger than Exxon, and Exxon alone posted a profit of $8B in the last quarter!

So the leading reasons for the present bull market in Gold remain: India and China buying, with both their economies on a tear; and The Middle East re-allocating some of of some profits in the Oil Sector into Gold.

Sanjay John G.