In conjunction to my previous journal about exploring gold value as new cost estimation basis in pipeline projects, I found an interesting comparison between Gold and Oil Price.
Surprisingly, the gold to oil price ratio has shown a certain range of value for long period of time.
In addition, both have relatively same trend in pricing since 1974, when dollar didn't tie to gold value anymore. When gold price started decreasing about two years ago, oil price just followed it about six months ago. But again, in terms of gold to oil ratio, it has no big difference.
I have randomly checked the ratio numbers using independent and reliable source of data. Hence I would say that the ratio calculations are valid.
Can we then say that the real money with intrinsic value such as gold will stand the test of time?