This is a useful way of trying to put current gold prices in commodity context, but it assumes something that isn’t true. And that is, of course, that gold trades like a commodity all the time, so that it’s current out-of-whack ratio (that’s technical talk – you’re welcome) with other commodities signals something set to regress to the mean.
Maybe. But it could also mean other commodities are undervalued. Admittedly, I don’t believe that, but hey, it’s possible, even if a teensy bit hard to imagine given China tightening.
More likely, however, is that it could mean that other commodities are trading on factors other than the ones that influence gold, at least at present. This thesis is the one that I find most convincing, the essence of which is that gold is disconnecting from commodity indices because it is part commodity, and (newly) part currency. While that status won’t last, it would explain why we’ve seen a ratio regime change in gold.