Where can I tell hugo that images live in directory static/img and that they will be in directory img of the resulting website? I searched documentation and forum for this information but found it nowhere.
Nevertheless, putting images in the article directory is not a good solution because when you render article in the article list, image src won’t be correct. I think that there should be an option to indicate where is the image directory.
@casa: I think that there should be an option to indicate where is the image directory
I’m sure you could do that by editing your img.html [and figure.html ] in /layouts/shortcodes/ to hard-wire the path to wherever you wanted to keep your images into the src="..." part of the HTML they generate.
But it seems a bit a bit of a palaver to me, when you can just add your image directory under /static/ and then reference that easily enough as /name-of-imagedir/ in your image tags [as I outlined above].
I’m working on adding a github (and probably bitbucket) compatible mode, and this will need to manage to figure out relative linking for images and also ‘get it right’ for the article list case that @casa mentions.
I’m afraid that implementing this solution result in documents that are not markdown anymore. What if I want to generate PDF or ePub from my articles? This is not just hypothetical, this is what I do with each article on my website, at http://sweetohm.net. Project for this site is at http://github.com/c4s4/sweetohm.
Can you explain what you mean by ‘not markdown’? My focus is to enable hugo to be compatible with the markdown used in GitHub - as our devs and users seem to read both the hugo site, and the GitHub version of the same documents.
And so to me, having Hugo able to deal with GitHub markdown paths is improving its markdown compatibility.
Sorry, I was not replying to your post but to the previous one that suggested to use shortcodes, which are not makdown.
Regarding your post, I totally agree that there should be a compatibility with github links. Nevertheless, I think that the issue is more general : a markdown document should not define image paths because they depend on the rendering context. Image paths in github and website or while rendering PDF for instance will be different.
Thus I think that there should be a way to tell Hugo the path for images and it would set it correctly for various document locations.
I have fixed this issue using pandoc with a filter that sets the path of the image while processing.
The above answers are helpful, but I found that when using a baseURL that is not the root of the website I had to also add canonifyURLs: true to the config.yml
Then the markdown 
worked to reference image content from static/images/pic.jpg
Specially on same host multilingual sites with different base URLs depending upon the language, setting canonifyURLs in config file is a MUST if you want to get the same results both in development mode (i.e. using hugo server) and in production mode (using the published directory tree).
I read the current documentation and I was frustrated after not finding more hints for setting up my multilingual site. My case is a single-host but different url base upon language (i.e. “http://myhost/en” for English and “http://myhost/fr” for French). In my case, when relative links worked using hugo’s server, then they didn’t work using the generated site. And viceversa, when I managed to make them work in the generated site, they didn’t work using hugo’s server. By setting canonical paths all links where generated fine in both environments.