GOLD is all the way up close to $1085/oz. Yikes. Strangely, the dollar was also up today. Some are pointing the finger at India's Central Bank who Bought 200 TONS of it. Some are reacting to the news saying that gold will again collapse. It did hit $1000/an ounce in the 80's... I am afraid that it will stay up for a while though. Remember that every U.S. Dollar was at one time backed with GOLD... When currency goes haywire: people look back to one of the original currencies and something recognized worldwide as being "of value". Unfortunately, when the bubble bursts: it could be devastating for many who are converting their entire fortunes into gold to "protect" themselves from double digit inflation and the deterioration of the US dollar.
FNMA 4.5% bond is trading down about 12 bps today after being further underwater for much of the middle of the trading session.
Dow is off about 8 points is all.
Traders are trying to keep their positions LEVEL as they wait out the Federal Open Market Committee Meeting. We will hear what the FOMC has been talking about tomorrow. They are the group who decides when to begin raising the fed funds rate again. Last December they drove the rate down to "From 0%-0.25%" which seemed really strange. Theory is: cheaper money borrowed from the feds (low fed funds rates) makes it easier for businesses to borrow it and then use it to enhance the economy with lending and other business ventures. When things start heating up too much, they raise the funds rate to make money less accessible and therefore curb inflation. (Inflation = devalued US dollar because it is so readily available for cheap.)
Cheers,
Chad
