Gold is also traded in dollars. Does it get cheaper when the dollar is weak? Um, no.
When dollars are weak and getting weaker, people dump their dollars for real assets. As the dollar gets weaker, the relative value of real assets goes up. If the dollar gets weak, then gold — which is stable and kind of has the same value relative to goods and services overall — goes up.
If the dollar loses half its value, then it takes twice as many dollars to buy the same weight of gold it used to take. An ounce of gold that used to cost $400, now costs $800 because the dollar is only worth half of what it used to be worth.
The same is true of oil. Oil is worth what it is worth relative to other goods and services. Right now the price of oil hasn’t gone up too terribly priced against the Euro, which is strong. It has skyrocketed against the dollar, which is weak.
Oil has gained very, very strongly on gold in the last few years. The dollar is a very small reason of why oil has gone up so much. An ounce of gold will purchase just under 7 barrels of oil. A year ago it purchased 10 barrels. 10 years ago it was close to 25 barrels and was as high as 30. While gold has gone up, adjusted for inflation it’s simply gone back closer to it’s normal average. Oil however is way beyond that.