Gold vs Crude Oil
The ratio between an ounce of gold and a barrel of oil is one of the oldest gauges in commodity markets. It sets a metal that is hoarded against an energy source that is burned — and whose quoted price is not that of a barrel in a tank, but of a contract that has to be replaced over and over.
Over the period both series share, Gold (Ounce) comes out ahead at +10.8% a year.
| Asset | Total return | Annualised | Volatility | Largest drawdown |
|---|---|---|---|---|
| Gold (Ounce) | ×14.6 | +10.8% a year | 15.2% | −40.7% (December 2015) |
| Crude Oil | +222.2% | +4.6% a year | 38.3% | −86.0% (May 2020) |
Figures calculated on 26/10/2026 from monthly closing prices. Past performance is no guide to future performance.
What it costs not to be storable
An ounce of gold sits in a vault for a trivial fee, indefinitely. A barrel of oil needs a tank, insurance and supervision, and world storage capacity is finite — it was effectively full in the spring of 2020, when demand collapsed within weeks.
That difference is not theoretical; it is paid for. The price shown here belongs to a futures contract that must be sold before expiry and bought back on the next one. When the far contract is dearer than the near one — the usual state of the oil market — each roll costs money. Over long periods, those rolls pull an oil fund’s curve a very long way from the barrel price itself.
Two markets, two kinds of shock
Oil takes supply shocks: OPEC decisions, conflicts, sanctions, production accidents. Its moves are abrupt, and its price can double or halve within months, which few assets do.
Gold takes confidence shocks. The two sometimes coincide — a war lifts both — but for different reasons, and never by the same amount or for the same length of time. The gold-to-oil ratio, followed for decades, spikes in exactly those disorderly moments when energy grows dear and shelter is sought.
One episode is necessarily missing from the curve: on 20 April 2020 the American benchmark contract traded below zero, holders willing to pay not to take delivery. A comparison expressed as a multiple of an initial stake cannot represent a negative price.
Frequently asked questions
Does an oil fund track the barrel price?
Not over time. It holds futures it must roll from one expiry to the next, and that roll costs money whenever the far contract is the dearer one. Over several years the gap against the quoted barrel price becomes very wide.
What is the gold-to-oil ratio for?
It measures how many barrels an ounce buys. Analysts follow it as a stress gauge: it soars when a flight to safety meets cheap energy, and collapses in oil shocks.
Which oil is this?
The American benchmark contract, the most heavily traded in the world. North Sea Brent, the European benchmark, trades near it but not at the same price, the difference reflecting transport costs and crude quality.