How much gold and oil?

The basic relationship between the amount of gold and the dollar's value is well known and understood, and like every other economic indicator, there are times when the relationship strong and weak periods.

But what about oil? Is there a connection between the real and tangible products to the dollars, a fiat currency in the paper?

Gold / Oil

The price of oil is closely related to the political situation in the Middle East, integrated, while the movements is the amount of gold by central banks and other factors will affect. However, a study of these critical resources, an interesting read.

If a graph of the measured movements in the price of gold and oil, a direct relationship between the two would result in a line of constant value. Even if price movements are not proportional to each other, the line will remain linear, but may rise or fall.

Gold Oil Ratio = price of gold (ounce). / Crude oil price (per barrel)

If you draw the graph gives the equation above shows a long-term trend that shows the relationship between spending a high of 30 and a minimum of 10, with most of the time in the community.

This indicates a strong relationship between the price of gold and oil, but it does suggest that in general the rise and fall of the two together in the long run. Interestingly, were after 9 / 11, the two always together and divergence in the relationship is less volatile.

With the ratio of gold / oil

This ratio gold / oil may be useful in technical analysis to determine when the relationship is on the line and assume price movement trends. For example, the indicator stood at 30, you know that gold is overvalued or undervalued, and that oil markets are willing to take action.

Finally, it should be noted that oil and gold products, which are of great importance in the global economy and remain always respond to events that affect the whole world. This does not, then, that moves the oil is worth more than the gold or the amount of gold depends on oil. Both are simply reacting to how the common geo-political conditions and market conditions.