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April 9, 2017

Makeover Monday: What Does the Gold-Crude Oil Ratio Mean?

This is a pretty special week for me. 10 years ago, I downloaded Tableau and my life was forever changed. So I thought for Makeover Monday week 15 that we should look back at one of my very early blog posts. It turns out that this post was kind of like Makeover Monday, but I didn't call it Makeover Monday back then. I created this visualisation about the relationship between gold and oil prices:

An interesting sidebar: I went back to the original blog post, downloaded the workbook, then opened it to see how I had shaped the data. Turns out I build this in Tableau 4.1. How cool is that!?! Dashboards had just been added to Tableau. Ahh, the good old days! People starting to use Tableau now have no idea how good they have it.

Anyway, back to the makeover.

What works well?
  • Minimal use of color
  • Axes are clearly labeled
  • Trend line adds context
  • Scatterplot portrays the relationship well

What could be improved?
  • The title doesn't tell me much at all.
  • What does each dot mean?
  • Is there more to the story?
  • What does being above or below the trend line actually mean?

Keeping all of these questions in mind, I had an idea. Instead of looking at a scatterplot again, does it make sense to look at the gold price compared to the oil price as a ratio? That is, the price of one ounce of gold divided by the price of one barrel of crude oil. I wasn't really sure if this metric was valid. It made sense in my head, so I ran it by Eva who said it made sense to her too.

Ok great, but what does this ratio actually mean? I turned to Google and found a few great articles, one of which I refer to in my final visualisation. First, I looked at this article from The Telegraph, which included a chart of the gold-oil ratio. Phew! I'm not crazy after all.

Next, I read this article that explained in simple terms with examples, what the gold-oil ratio means. This was incredibly helpful in crafting the story of my viz. Referenced inside of the article was a very detailed research paper on the gold-oil ratio that provided a tremendous amount of context. This bit of research didn't take long and it really helped solidify the ideas that were in my head.

With all this in mind, here's my Makeover Monday week 15 about the gold-oil ratio.


  1. Andy, if you have the time and inclination... okay, if you have the inclination as there's no way you have the time, try comparing the price of oil with the price of natural gas. Fracking has made natural gas abundant and inexpensive. I think up until a few years ago you would have seen a strong positive correlation and now there is likely a negative correlation.

    Love the new viz, BTW. Amazing to see the degree to which we have all progressed.

    1. Thanks Steve! I'll make a note to check out that relationship.