Up like a Rocket, Down like a Feather

The title is how I have always seen gasoline pump prices go. It seems like when oil goes up $1 barrel, gas will jump that day. Forget the logic that says, there is no way oil got from the Oil Derrick, to the refinery and to the gas station to be pumped into my car in Southern Oregon the next day.

However, the second part of the statement is true also. The day prices go down, do the pump prices? Nope. It can take days or weeks to fall. The talking heads (the PR people, not the band) will tell you, "OH, it takes time to filter through..."

I have to say though, this time feels different. Maybe this is due to demand actually falling this time and the oil companies trying to stoke usage. Summer is their traditional big demand month and yet in June demand was 5.2% off!

According to this article prices are going to dip up to 25 cents more by Labor Day. Cannot come to soon. Energy has been a key driver (along with cheap money) of inflation. Perhaps we can escape the "Pit and the Pendulum" one more time!

Are the prices coming down where you are as well?

Personal Finance QuickTake: Even Gold Gets Less...Golden

Sure your 401k is down, stocks are on a roller coaster, savings rates are getting whacked, but at least you will always have gold right?

That yellow metal has been on a roll as the dollar tanks. Not a big shock as it has always been a hedge against currency movement.

However, Gold has been in a bit of too much of a tear. Gold recently busted the $1000 per ounce record level, not seen adjusted highs since the early 1980's. But gold fell nearly $100 an ounce back to the $950 level. The real question is there even support there as many investors feel gold could correct back to the $850 sort of level.

As this increase has been 100% investor driven, and gold is priced in dollars world round, it is easy to see why some are taking the money and running. After a housing bubble an Internet bubble and an Ice cream bubble (OK I made that up) investors want to lock in profits...on something.

From the Report:

With lower mortgage resets, the upcoming elections - which tend to boost the dollar - and the coming seasonal lull for gold, Nadler sees gold slipping to around $650 to $750 in the summer.
"That represents a good equilibrium level for gold, as jewelers will be able to sell gold again," he said. Still, some analysts think Wednesday's selloff is largely a hiccup - a temporary reaction by speculative buyers to changes in the economic climate, which can dramatically impact on the price of gold.

"When you are operating in a heavily overbought market, corrections like the one we're seeing today are very easy to have," said Nicoals Kavalis, a senior analyst at precious metals consultancy GFMS.

So is the dollar finally on track? With all of these rate cuts that would be amazing, but perhaps America's Housing induced cold has been caught by our friends over the pond.

Save the Penny, Save the World

OK. Maybe I've watched the box set of Heroes Season One too many times recently, but once again people in Congress are trying to kill the penny again. 60 Minutes ran some great reports on this topic recently.

Given the run up in the cost of all commodities, especially Copper and Zinc, it should be no shock that the cost to make a Penny AND a Nickel are higher than the face value on the coins. No one is talking about offing Jefferson ...yet, but old Abe is in the cross-hairs again.

In 1982 they changed the Penny from 95% Copper and 5% Zinc to 97.5% Zinc and 2.5% Copper. But now the price of Zinc and Copper are such that the penny costs 2 cents to make. So what to do?

I frankly can't see the US Congress cutting the penny. The short term savings of $130 Million to stop all production of pennies, doesn't outweigh the inflation estimates of $600 Million from the American for common sense. Advocates that say, "prices will round down too and balance this out", sure have forgotten what happened to all of those countries that changed over to the Euro.

The next morning in Germany, instead of just seeing the equivalent price in Euro's from their old Deutche Marks, they found prices rolled up to the nearest Euro- .99 mark. An average inflation of 4.5%...overnight! This alone has been the rally call for other European counties to avoid the currency!

The US economy is scared with 3.1% inflation over a year...imagine 4.5% overnight!

I don't think this has real legs to get passed, but instead of charging the mints with monitoring and adjusting metallurgy as needed, some in Congress take a knee-jerk reaction that could cost us hundreds of Millions!

Abe, save us...you are our only hope!