Gold : Crude Ratio

Today's sell-off in crude dominated the headlines, as equities rebounded and precious metals got whacked. There was much talk about how a correction in crude will bring down the precious metals market, so I made a chart (normalized) comparing the performance of gold to crude. Note the dramatic reversal since Jan 2008.

If there is any merit to mean reversion and the historic correlation between gold and crude, we should see the gold:crude spread climb back up...but will this happen through a massive sell-off in crude or a strong rally in precious metals? With tightening oil fundamentals (peak oil!), soaring inflation, weakening fiat, and deteriorating market confidence, the latter scenario seems more likely.