Correlation between price of gold and consumer-price index?

[samuraidog]

I found this article very interesting.

http://www.marketwatch.com/story/gold-i ... beforebell

So how should you decide where gold is in its long-term cycle? As a rule of thumb, the researchers urge investors to calculate a ratio of gold’s price to the level of the consumer-price index. This ratio’s historical average has been about 3.4 to 1, so it is a good bet that gold is overvalued whenever the ratio is well above that level.

When gold hit its high over $1,900 an ounce in September 2011, for example, the ratio was more than 8 to 1. In January 1980, the ratio stood at more than 11 to 1.

Unfortunately for the gold bugs, the current gold/CPI ratio — 5.3 to 1 — is still above average, even in the wake of gold’s plunge over the past three months. To be in line with that average, gold would have to trade for $780 an ounce. “Note carefully,”? Erb says, “our research doesn’t provide a basis for predicting when gold will once again trade at fair value, however — only that it will eventually do so.”?

[smurff]

The CPI was calculated very differently in 1980 compared to 2011.  No hedonics, no substituting tofu for steaks.  I wonder what these ratios would look like if they used shadowstats "corrected" CPI index values?