As a rule of thumb when the ratio is below 9, oil is relatively expensive (and gold is relatively inexpensive) and when the ratio is above 20, oil is relatively inexpensive (and gold is relatively expensive).
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When the markets unravel, as they must, gold will tumble, just like it did in 2008. It’s NOT a safe haven in a deflationary environment...After this cycle has wrapped up and we head into the upward swing of the next one, then gold will soar.
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The purpose of gold is to protect purchasing power and hedge against inflation but gold is not immune from speculative bubbles and overvaluation and when the price of gold is compared to the CPI index it is clearly evident that gold has become overvalued.
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