STATE OF BUSINESS: The Gold Scheme

As the new Administration moved in, a prime question was: Will the U.S. raise the price of gold? For months, speculators and wishful thinkers had been puffing up the possibility, and support from abroad gave the glittering scheme some weight.

But the arguments for revaluation were dubious at best. The theory was that by raising the price of gold from $35 to perhaps $52.50 an ounce the U.S. could 1) increase the value of monetary gold stocks in the hands of foreign governments and central banks, 2) encourage hoarders to bring gold out of hiding. The $12 billion windfall from...

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