Gold vs Oil

Yesterday the world witnessed one of the greatest drop of gold price from 4800 to as low as 4100 and bounced back to ~4400. Oil price went through quite the opposite, especially during the latter half of the day. This makes me wonder, since I have been suggested to start increasing my oil position (and I did) and cut some gold in my portfolio, is investing between the two an either/or situation? and, which of the two shall win in the long run? (the chart below comes from a Bloomberg article)

I asked ChatGPT for an answer. Here's the result:


But what ChatGPT did was simply replacing "gold" with "save-haven/store of value/liquidity asset" and "oil" with "cyclical/energy supply/inflation hedge asset", and what I am truly interested in, what I think truly fits the human understanding, is something like this: (with very simple prompting)


Both are correct interpretations of the world, but with very different perspective (and therefore very different psychological/cognitive results). In the short run, a whole lot of things are happening that might cause interest rate changes, and you have to beware of these factors as much as possible if you want to win in the short run. The same for energy supply, liquidity, geopolitical conflicts and so on. In the long run, however, these factors constitute a bigger picture which can only be summarized philosophically as material, energy, force, institution, trust, confidence of the future. It is at this point that mere quantitatively methods fail, because data are always driven by narratives: where to look, by what metrics, how to break down, how to explain.

A much more difficult yet crucial question for anyone considering the gold vs oil scene is thus: since we are heading towards a less stable world, which kind of instability is that about? Material or Institution? Energy or Trust? 

The obvious answer is BOTH. Which leaves us another way of understanding the gold vs oil question: in the long run, both prices will rise; only in the short run do they contradict each other. What is really happening is, quite funnily, that people feel the pain first and foremost from the institutional (trust) side and overreact to it, causing gold price to surge to an all-time-high (higher than it's supposed to be), and only afterwards do we realize the material side of the story, and suffer from the destablization of the energy regime.

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