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Gold/Oil Ratio

Definition

A valuation metric measuring the price of one ounce of gold in terms of barrels of West Texas Intermediate (WTI) crude oil. Historically, the ratio averages around 16:1. A high ratio (above 25:1) suggests that oil is cheap relative to gold (often during recessions), while a low ratio (below 12:1) suggests energy is expensive or gold is undervalued relative to real-world energy costs.

Formula / Calculation

Gold/Oil Ratio = Spot Gold Price / WTI Crude Oil Price


Why It Matters

The Gold/Oil ratio is a powerful indicator of geopolitical stress and global growth. During the 2020 crash, the ratio spiked to an all-time high of over 90:1 as oil prices went negative, signaling total economic shutdown. It is a "real" value metric that strips away fiat currency fluctuations.

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M2/Gold Ratio
A macro valuation metric comparing total global M2 money supply to the market capitalisation of all above-ground gold (estimated ~212,582 tonnes × spot price). The ratio measures how much fiat currency has been created relative to the finite stock of hard money in existence. When M2 expands faster than gold's market cap — through QE, fiscal monetisation, or credit creation — the ratio rises, signalling fiat debasement without corresponding hard asset appreciation. When gold outpaces M2 growth, the ratio falls, marking a re-rating phase where gold recovers its monetary coverage. Historically, ratio extremes in either direction have been followed by multi-year mean-reversion, making it one of the most reliable long-horizon gold valuation frameworks available to macro allocators.
Debt/Gold Z-Score
A proprietary ratio comparing total US Federal Debt to the dollar value of US officially-reported gold reserves at current spot prices, normalised as a Z-score against a 25-year rolling window. It measures how many "gold equivalents" the US government would need to redeem its entire debt — a thought experiment derived from the classical gold standard era.
Gold/Silver Ratio
The number of ounces of silver required to purchase one ounce of gold at current spot prices. The long-run historical average is approximately 55–65x. Extreme readings above 90x have historically—in 1991, 2003, 2009, and 2020—preceded significant silver outperformance as the ratio mean-reverts. Industrial silver demand growth (solar panels, EVs) creates an additional structural tailwind.
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