If I had an ounce of gold, how many barrels of crude oil could I buy?
This isn’t a question I have ever asked myself before and to be honest, if I had an ounce of gold to spend I probably wouldn’t look to buy a barrel of crude oil with it! However, this is exactly what the Gold-Crude Oil Ratio calculates. The ratio is designed to eliminate the influence of inflation to make it easier to compare gold and oil prices and determine when gold is either cheap or expensive relative to oil. Since we are looking at oil and gold prices this week it seemed like a perfect use case.
This weeks’ #MakeoverMonday looks at a viz created by Andy Kriebel way back when he started using Tableau in 2007 (in Tableau 4.1!!!). Andy wanted to determine if there was a relationship between gold and oil prices:
What do I like about the original?
- The viz is simple with no unnecessary chart junk.
- The colours work well.
- The circles are transparent which helps show any circles underneath those that overlap each other.
- The trend line guides the reader in showing the relationship between the two metrics.
What could be improved?
- The circles aren’t labeled. What are they showing? Presumably they show years but which year is which?
- Other than the very simple title there are no annotations or call-outs.
- The chart has a border which is unnecessary.
- I don’t like the shaded title. It reminds me of an old-style MS Excel chart.
- It’s unclear from the axis exactly what they are showing. Presumably this is price but what units are being used?
What I Did
- When I saw the subject this week I immediately knew I would use the Gold-Crude Oil Ratio to help determine if there was a relationship between the two metrics.
- The price of an ounce of gold and the price of a barrel of oil differ significantly which makes a comparison of the two metrics more difficult. Both could be displayed on the same line chart with dual axis but if the axis were synchronised (which they should be) the price of oil would appear insignificant compared to the price of gold. For this reason I decided to use the Gold-Crude Oil Ratio displayed as an area chart over time.
- I used months/years on the x-axis of my chart (as opposed to years alone) as the years view hid many of the price fluctuations which I wanted to show.
- I thought it was important to include separate area charts to show the price trends of both oil and gold separately. These would also help me to get familiar with the data and understand the relationship between the two metrics myself.
- Research – To help me to understand the data further I did some quick reading on oil/gold price trends and the factors which influence them. This leads me to my next point…
- Annotations – I felt these were very important this week. What caused that spike in oil prices in 1990? Why did gold prices increase after 2008? Through doing my research I was able to understand the data better and guide the reader by adding annotations to explain my findings.
- Apart from three colours my viz is simple. As much as I love to add pictures and icons to my vizzes I felt these were unnecessary this week.
Here is my completed viz. Click on the image to view it in Tableau Public:
Thanks for reading.