As I drove the mile to work this morning, I noticed that the price of gasoline at the two stations I pass at the center of town were posting a price for regular unleaded of $3.949. That is down three cents from the peak price.
We did not reach $4 a gallon here. Is this just a pause on the way to more painful heights, or is the fact that Americans are driving less and buying smaller cars at last starting to have an impact?
I don’t know. It would be nice to think so.
But what I do know is to continue to keep an eagle eye on the price of gold. I have been reading recently that gold is following oil. I don’t think so. I think it is the reverse. Oil follows gold.
This certainly was the case in 1980. Gold peaked a year ahead of oil and its decline was followed by oil to a remarkably similar degree.
If, hypothetically, there is something in this observation, we won’t really know for sure for quite a while yet. Gold’s current peak of about $1,033 occurred in the middle of March, some two and a half months ago.
Is that it? Certainly gold’s fall off the 1980 peak was far sharper than the current decline. It went from $850 Jan. 21 to $463 on March 27. So far the smart money is simply calling gold’s present decline a correction in a larger uptrend. I will watch the experts argue it out for sure, but my undivided attention will be on the actual price of the precious metal.
It can foretell a lot.