If the ratio climbs above 10 again and stays there, we are in hazardous territory. The last time we were in this nosebleed territory was in 1981 during a deep recession. As the economy recovered the ratio declined - in other words bonds outperformed gold after 1981. Then in 2002, the ratio bottomed out and began to climb during Allan Greenspan's tenure.
The danger, as I see it, is that if a more responsible approach is not taken with US finances soon, gold will continue to outperform bonds and we could see a surge of dollars into gold and a crash in the bond market.
If the bond market crashes, that will leave the economy with a terrible hangover. The unspoken threat, is that a bond market collapse could also trigger a run on the dollar, leading to severe inflation (even though we are in a deflationary period currently).
This is the nightmare scenario.
A collapse in confidence in the US dollar.
Hopefully it never plays out.
Michael Burry Bets On Farmland and Gold
A Drunken Rowdy Bond Market