With the price of gold at $353.80 per troy ounce and the price of crude oil at $30.44 per barrel, we have a gold / oil ratio of about 11.6 right now.
The rule of thumb I've heard is that when this ratio is lower than 12, generally speaking gold is a bargain. It seems like every time over the last several months I have tracked this ratio it has been fairly close to 11.5.
By the way, this figure of 12 barrels per troy ounce maps neatly into James Turk's observation that the price of a barrel of oil tends to stay around 2.5 grams, even going back to the 1950's.
-- Patrick
http://fexl.com
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