Energy, Gold and BRICs

Here is more fodder for consideration:

Energy, as a percentage of the S&P500, peaked at over 20% in 1980. It then declined to near 6% in 2000. Now it is back at 10%. So, the price of energy stocks could double versus the rest of the market before they were historically overvalued / near a top.

Gold is a similar story. Gold relative to oil also peaked in 1980 at $800 versus oil at $40 per barrel. Normalized for inflation the past 20 years, the comparable price of oil would be $100, which means the comparable price of peak gold would be $2000. If the dollar continues to decline, then dollar inflation relative to 1980 (as a baseline) will increase this equation and $150 oil and $3000 gold at the next peak. If the pattern from the 70s repeats and we are at about 1972 right now (using the Bretton Woods II thesis), then we would see this scenario play out by 2015.

The above scenario is given a fixed world market for oil and gold. But it can be argued that the global supply of both gold and oil is tighter in 2007 and the demand is greater with the development of the BRIC economies (Brazil, Russia, India and China). So, lots of upside.