The commodity price boom, especially pronounced in gold and metals, is generating some remarkable statistics and dramatically revising some hitherto well-established ratios.
Consider this: one ounce of gold (GC00) now buys nearly 80 barrels of oil (CL00). Only once in the last 35 years has this happened when the oil price turned very briefly negative at the peak of the pandemic panic in the spring of 2020.
One might also contemplate the ratio of gold to a staple commodity like wheat. Three years ago, before the inflation spike and the Russian invasion of Ukraine that in large part sparked the rally in gold, one ounce of the stuff bought 200 bushels of Kansas wheat. At today's levels, that ounce of gold equates to 900.
Gold's record-setting rally which really took off last summer, is leading to a reappraisal of many assets in terms of their relative valuation. In a posting on X today, economist Peter Schiff, chief global strategist of Euro Pacific Asset Management, commented on the Dow Jones Industrial Average DJIA breaking 49,000 for the first time yesterday. "With gold closing above $4490, today's 49,462 close is worth just 11 ounces of gold. In September 1999 the Dow was worth over 43 oz. That's a 74% decline over 26 years,"
Gold's market cap is now $31 trillion, the largest of any asset. Until Tuesday, second on that list was U.S. tech behemoth Nvidia but the astonishing rally in silver, up 12% already in 2026 and up 159% in the last twelve months, has seen its market capitalization overtake America's largest publicly traded company.
The momentum behind commodities is already impressive in the young year with copper (HG00) up 6%, aluminum up 4% and nickel rising 10% while platinum (PL00) has gained 17% and palladium has increased 7%.
Some of this move in commodities is owing to the debasement trade, a theory promoted by Robin Brooks of the Brookings Institution, while others like the Strategas economists place greater emphasis on the fracturing of geopolitics and economic superpowers battling for supremacy and control of critical commodities in an era of deglobalization and vulnerable supply chains.
