Is Gold in a bubble?

There has been some talk in recent times to that effect.  How do you know when you have a bubble?

One way is to measure the price against some sort of standard.

Now, the price of gold topped around 1980 or thereabouts.  About that same time, the Dow Jones average was about the same as an ounce of gold.  Fast forward to the year 2000, and the price ratio was nearly 40 ounces for Dow.   Clearly,. the ratio was very low in 1980 and very high in 2000.  Most folks would agree that gold was in a bubble in 1980 and stocks were in a bubble in 2000.  By that standard, the ratio is now around 10 ounces for the Dow.  That is comparable to times past.  Clearly, by this measurement, gold is not in a bubble.

The ratio with the Dow is about what it was in 1993, just before the big rally in the late nineties.

Keep in mind something, here.  The PE ratio is a way to tell if stocks are becoming expensive.  The PE ratio now isn't extreme, like it was in 2000.  However, it is a bit high.

I did one more check with oil.  The price of oil is expensive today.  So, is the price of oil in a bubble?  It would be if there were an alternative.  Since oil is the only thing to power automobiles, planes, and trains, whatever the market will bear is what it will cost.  The price of oil v the Dow was cheap in 2000.  Oil is relatively expensive v. the Dow today.  The same is true with respect to gold.

Conclusion:  Gold is not in a bubble.  Oil is expensive.