Currently, one ounce of gold will get you 6.68 barrels of oil.
I think the chart makes it quite clear why Saudi Arabia and some others think oil is too high.
When Bill Clinton was president of the US, one ounce of gold could buy between 7 and 28 barrels of oil with the lowest ratio, 7.23 barrels of oil for one ounce of gold, occurring shortly before his last day in office.
It is interesting that during President Bush's term (following Bill Clinton) one ounce of gold bought between 6 and 16 barrels of oil with the lowest number of barrels per ounce in 2005 at 6.15. At today's record high prices for oil, we get slightly more barrels of oil (6.26 vs 6.15) for an ounce of gold!
Also of note is the 19 year support line indicates we are near an extreme level again.
Here is the same chart with the US Dollar ($USD) index added.
If the dollar has bottomed and we can make it go up again, perhaps with an energy program that does not send trillions of dollars to OPEC and higher Fed Funds rates, then US consumers could get some relief at the gas pump.
Discuss this article at our "Investing for the Long Term" facebook forum called "Energy, Oil prices, Alternative Energy, etc."
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