The better question
Many people search for the gold spot price and stop there. A more useful question is whether gold is expensive against the things it competes with: financial assets, other metals, inflation, energy, real estate, household income, and government debt.
GoldPrice.Cafe lets you switch from a normal gold chart into ratio views. Those charts show whether gold is gaining or losing ground against another benchmark across the selected time range.
Ratio views to start with
- SP500 / GLD: broad U.S. equities priced in ounces of gold.
- GLD / CPI: gold compared with the consumer price index.
- US.DEBT / GLD: U.S. public debt measured in ounces of gold.
- US.HOUSE / GLD: the median U.S. home priced in ounces of gold.
- GLD / OIL: how many barrels of oil one ounce of gold buys.
- GLD / SLV: the classic gold-silver ratio.
How to read the charts
A rising ratio means the numerator is gaining value relative to the denominator. A falling ratio means the denominator is gaining ground. The point is not to create a mechanical trading signal. The point is to see whether gold's current price is strong, weak, expensive, or cheap in a specific frame of reference.
Different ratios answer different questions. Gold against CPI is a purchasing-power question. Gold against stocks is an opportunity-cost question. Gold against debt is a monetary trust question. Gold against housing is a hard-asset affordability question.