Gold v Oil: 1983 to 2017

The gold/oil ratio shows the gap in price between the two commodities. A higher ratio means that gold is over valued compared to the price oil: either gold costs too much, or oil is comparitively cheap.

Since 1983, the gold/oil ratio has increased during periods of financial crisis, as oil prices tend to fall when economic growth is weak, and people look to gold as a safe investment.

19831985119902199932008420175

The following charts break down this period between 1983 and today, with the gold and oil prices adjusted to today's price.

1. Falling gold prices (Apr 1983 to Dec 1985)

Between 1983 and 1985, the prices of gold and oil dropped, but with gold falling at a greater rate. This led lower than average gold/oil ratios.

Ratio:

AVG ($16)$13$11MAX ($36)MIN ($5)Apr 1983Dec 1985

Gold:

$1062$730MAX ($1961)MIN ($358)Apr 1983Dec 1985

Oil:

$76$59MAX ($157)MIN ($17)Apr 1983Dec 1985

2. Oil glut (Jan 1986 to Jul 1990)

An over supply of oil in the 1980's, with its associated low prices, meant for relatively high gold/oil ratio.

Ratio:

$18$17MAX ($36)MIN ($5)Jan 1986Jul 1990

Gold:

$780$697MAX ($1961)MIN ($358)Jan 1986Jul 1990

Oil:

$42$39MAX ($157)MIN ($17)Jan 1986Jul 1990

3. Recession (Aug 1990 to Apr 1999)

The weakened global demand during mid of 1990s saw oil and gold drop to 35 year lows. The gold/oil ratio was relatively stable during this period.

Ratio:

$13$14MAX ($36)MIN ($5)Aug 1990Apr 1999

Gold:

$720$422MAX ($1961)MIN ($358)Aug 1990Apr 1999

Oil:

$51$27MAX ($157)MIN ($17)Aug 1990Apr 1999

4. Afghanistan and Iraq wars (May 1999 to Jun 2008)

In the 2000s the Afghanistan and Iraq wars pushed up oil to record highs, leading to a low gold/oil ratio.

Ratio:

$15$6MAX ($36)MIN ($5)May 1999Jun 2008

Gold:

$396$1046MAX ($1961)MIN ($358)May 1999Jun 2008

Oil:

$25$157MAX ($157)MIN ($17)May 1999Jun 2008

5. Global financial crisis (Jul 2008 to Feb 2017)

Since July 2008, the price of gold has risen to its peak price for the period, while the price of oil has dropped.

Ratio:

$6$22MAX ($36)MIN ($5)Jul 2008Feb 2017

Gold:

$1025$1256MAX ($1961)MIN ($358)Jul 2008Feb 2017

Oil:

$138$54MAX ($157)MIN ($17)Jul 2008Feb 2017

Sources