BalaMasa Womens 12916 Studded BalaMasa Charms Casual APL10738 Urethane Pumps Shoes APL10738 B07GV71W5Y Parent 2200d7e

BalaMasa Womens 12916 Studded BalaMasa Charms Casual APL10738 Urethane Pumps Shoes APL10738 B07GV71W5Y Parent 2200d7e -

While 2016 fades in the rear-view mirror, market trends from last year will continue to play an important role in 2017. Therefore, analyzing and understanding data from 2016 may help get your portfolio best positioned for the new trading year.

For example, both gold and crude oil experienced significant (and possibly unexpected) price action during 2016.

In fact, it wasn't that long ago that a slide in crude oil threatened to take down worldwide equity prices when prices slumped below $30/barrel in February 2016.

After bouncing ever-so-slightly due to reduced global production (improving supply/demand equation), crude oil truly took flight when OPEC started discussing (and ultimately agreeing upon) a coordinated supply cut. Due in large part to this OPEC activity, crude oil marked its biggest annual gain since 2009 as West Texas Intermediate (WTI) rose 45% during 2016.

With the oil cartel's production cuts scheduled to kick off at the start of 2017, the direction of oil prices in early 2017 will be largely dictated by OPEC's adherence to the deal. Worldwide oil production data for January of 2017 should be available in early February.

While gold prices followed a similar upward trend alongside crude oil for the bulk of 2016, this well-known commodity reversed course dramatically during the last couple months of last year. The early bullish trend in gold was likely due to the US Federal Reserve's decision to hold off on an interest rate hike throughout the first three-quarters of the year.

Likewise, the drop in gold prices at the end of 2016 was related to expectations (later proven correct) that the US Federal Reserve would raise rates at their December meeting. With the Fed guiding for three more increases in benchmark interest rates in 2017, gold prices movement in 2017 will hinge to a great degree on the actions of the US central bank.

Generally speaking, rising interest rates catalyze a strengthening US Dollar, which in turn weakens gold. However, gold prices can also be affected by perceived threats to the global economy (i.e. "flight to safety) and other factors.

It's possible you've already mapped out a plan for 2017 in crude oil and/or gold that fits your existing portfolio, outlook, and risk profile. However, if you are still considering new ideas for the coming year, a recent episode of Closing the Gap - Futures Edition may be a great place to start.

On the show, hosts Tom Sosnoff, Tony Battista, and futures expert Pete Mulmat outline a pairs trading idea that involves crude oil and gold futures. While the show includes a wide-ranging discussion on both commodities, the crux of the rational for the the trade involves the "Gold/Crude Ratio."

Obviously, picking the direction of either commodity over the course of 2017 is extremely difficult. That's why the trade detailed on Closing the Gap is deployed using a reference point that measures the historical relationship between the prices of the two commodities.

The Gold/Crude Ratio is calculated by dividing the current price of crude oil into the current price of gold. With gold currently trading about $1152/ounce and crude oil trading $54/barrel, that means the Gold/Crude Ratio currently stands at roughly 21 (1152/54 = 21).

As you can see in the graphic below, the current value of the Gold/Crude Ratio is somewhat depressed compared to recent history:

BalaMasa Womens 12916 Studded BalaMasa Charms Casual APL10738 Urethane Pumps Shoes APL10738 B07GV71W5Y Parent 2200d7e -
adidas Originals Women's Shoes | Samoa Sneakers -, White/Ice Pink/Talc, (7.5 M US) Parent B01N5FGFWL , Marni Women's SNZW000103TCR8600B59 Blue Fabric Slip On Sneakers Parent B07HGHSYB9 , Men's/Women's Summer,Sandals,Female,Foot,Ring,All-Match,Peep,Toe,Heels Parent B072R5ZCXP Wear resistant At a lower price comfortableGentleman/Lady Puma Womens 363391-01 Parent B01M19Z77A selling price Price reduction Breathable shoesRomika Women's Nadine 16 Suede Straps Sneaker (50016) Parent B071D4F56F , T.T-Q Women's Dance Shoes Ballroom Satin Chunky Heel Multi-color Black and Sliver Latin Sandals Salsa Jazz Tango... Parent B07DLY3CGC , PUMA Women's Suede Classic Perforati WN's Sneaker, Blue Flower-Whisper White, 5.5 M US Parent B075RFCLZZ , Vaude Women’s Ubn Solna Mid Low Rise Hiking Boots, Hazelnut, 7.5 UK B06XCNMCRB Parentadidas outdoor Women's Terrex Swift R2 GTX Grey Three/Grey Two/Chalk Coral 9 B US B072Y23C3K ParentNIKE Women’s W Air Max 97 Fitness Shoes B07G7YFS1C Parent , Nine West Women’s Zofee Leather Ankle Boot B01N47XSC0 Parent , Fly London Adit951fly, Women’s Desert Boots B071FQG42W ParentCamper Women’s Beetle 46613 Sneaker B01MZFBRLJ Parent , Tamaris Women’s 25223 Ankle Boots, 3 UK B01IBL8WFY ParentWomen's Low Heel Short Ankle Boots B07GXGKXFB Parent , Grunland PO1442 Motu Polacco Donna P. B07H7L2S1X ParentDorothy Perkins Women’s Genna Lazer Cut Court Closed-Toe Heels B01MU9AY7C ParentHXVU56546 Winter Women'S Shoes Boots Plus Velvet Warm Boots Martin Boots Thick Flat Cotton Shoes B077Z5RWQZ Parent , AN Womens Hollow Out Square Heels Metal Buckles Urethane Pumps Shoes DGU00606 B07H1S3JGP Parent , Allhqfashion Women's Pu Kitten Heels Pointed Closed Toe Solid Pull On Pumps-Shoes B01KUKGZ5I ParentGentleman/Lady Dei colli Women’s Sandals B07BYXP5XQ Parent Quality queen The latest technology Modern modeGAOLIM Women'S Shoes In Spring, Summer, Small Feet, High Heels And Shallow Single Shoes B07CGRTB2X ParentJSHOE Womens Latin Dance Closed Toe High Heel Salsa Tango Modern Jazz Shoes Sandals,Black-heeled6cm-UK7.5/EU42... B078W8DCB3 ParentRoman Women's Velcro Strap, All Match Plain Open Toe Wedge Sandals B07316YN5K ParentDKFJKI Women's Buckle Strap Sandals Buckle High Heels Stylish Simplicity Wild Dress Dance Party B07D5CPLXZ Parent , Adrianna Papell Women’s Rio Platform B06Y2FDMMG ParentHBDLH Women's shoes/Breathable/comfortable12Cm High Heels Women Sandals Summer Muffins Thick Bottomed Rivets Toes... B07DP3MPX6 ParentAdeeSu Womens Casual Slip-Resistant Buckle Urethane Boots SXC02275 B0785TCD72 Parent , Propet W0206 Women's Cush'N Foot Diabetic Shoes B00ALYZU1O Parent , AARZ LONDON Womens Ladies Crystal Diamante Open Toe Casual Comfort Slip-On Low Wedge Heel Lightweight Sandals... B07BH496N7 Parent

According to the above data, traders expecting a reversal in the Gold/Crude ratio could express their opinion by purchasing gold futures and simultaneously selling crude oil futures. Obviously, the ratio goes higher (i.e. the trade wins) when either gold prices move higher, when oil prices move lower, or both.

For a complete explanation of this trade we hope you'll take the time to review the full episode of Closing the Gap - Futures Edition focused on pairs trading these two global commodities.

While this trade structure may not fit your current portfolio and/or risk profile, it's possible that ever-changing market conditions may make it look more favorable at some point in the future.

If you have any questions about futures or any other trading topic, we hope you'll reach out at

In the meantime, we wish you all the best for a great new year!

Sage Anderson has an extensive background trading equity derivatives and managing volatility-based portfolios. He has traded hundreds of thousands of contracts across the spectrum of industries in the single-stock universe.

BalaMasa Womens 12916 Studded BalaMasa Charms Casual APL10738 Urethane Pumps Shoes APL10738 B07GV71W5Y Parent 2200d7e -

BalaMasa Womens 12916 Studded BalaMasa Charms Casual APL10738 Urethane Pumps Shoes APL10738 B07GV71W5Y Parent 2200d7e Shoes