GLOSSARY · DIVERGENCE
GODI
Gold-Oil Divergence Index
DEFINITION
A composite index measuring gold/oil ratio extremes and geopolitical stress transmission. Higher scores indicate greater divergence — meaning gold and oil are decoupling from their historical relationship, often signaling geopolitical risk or macro regime shifts.
Components & Weights
40%
Ratio Deviation
Gold/oil ratio deviation from its 5-year rolling average. Extreme readings signal geopolitical stress or demand destruction.
35%
Correlation Breakdown
Rolling correlation between gold and oil returns vs. historical norm. Decoupling = divergent macro drivers.
25%
Regime Signal
Whether the gold/oil ratio is in a historically extreme percentile (top/bottom decile), signaling regime transition.
Score Interpretation
| Score Range | Signal | Interpretation |
|---|---|---|
| 0–30 | Low Divergence | Gold and oil moving consistently; normal regime |
| 30–60 | Elevated Divergence | Relationship weakening; geopolitical stress possible |
| 60–100 | High Divergence | Extreme ratio; macro regime shift underway |