Gold took a bit of a breather last week and closed just slightly below where it opened last Monday. This morning gold is down about $8 to around $965.
The metal still remains near record highs and seems to be well supported during these dips. There is still tremendous concern about the US economy and Goldman Sachs came out this morning suggesting that the Fed will meet before it is scheduled to meet later this month in order to cut rates on an emergency basis. Last week it was reported that the economy lost 63,000 jobs in February, the worst showing since 2003.
Fed funds futures are pricing in a 75 basis point rate cut next week on March 18. Overseas, European Central Bank President Jean-Claude Trichet stated that increased inflation risks in Europe essentially signal that rate cuts would be unlikely. That news sent the dollar to new lows against the Euro.
Over the last 36 years, an ounce of gold has averaged around 15 barrels of oil. Today, an ounce of gold will buy 9.6 barrels suggesting that gold is vastly undervalued compared to oil.
Donald W. Doyle, Jr.,
Chairman and CEO
David Beahm,
Vice Pres. and Director of Marketing and Economic Research
