The concept of exchange between items of tangible value, such as oil and gold, initially assumes that the quantities of exchange would be expected to remain the same. But, in the real world things such as supply and demand enter into play and have to be given due consideration. Some of that is evident in this graphic.
The other thing that I see is that there appears to be a baseline "value" relationship between oil and gold, somewhere in the region of 10 barrels per ounce. That is about where we are today. If you accept this notion, then there isn't any cause to complain about the "price" of oil, because it real terms it hasn't changed from its baseline. What becomes clear is that the value of the US dollar has dropped. A rational response to this situation would be to convert all of your US dollars into gold, at least whenever you've accumulated enough of them to make the transaction costs acceptable. Then, whenever you're ready to purchase real commodities you re-convert gold into dollars and make the purchase. Theoretically, at least, your store of gold will preserve its "value" relative to other tangible commodities, independent of the number of dollars represented by the pile of gold.
What do you think?
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