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Lately the inflow of bank savings deposits has slackened as well, causing widespread fears that depositors will soon begin taking their rainy-day funds out of institutions to put them into higher-paying bonds and other securities. The banks are unable to raise their bid for savings: almost all of them are al ready paying as much interest as authorities allow (61% for example, for large-sized six to twelve month certificates of deposit in New York).
Testing the Tiers. In the renewed flurry of gold speculation prompted by France's political crisis, the free-market price of the metal rose to a new high of $42.60 per oz. in London last week. That brought out enough sellers to push the price back down to $41.75 at week's end. The drop eased concern that the speculators might wreck the two-tier system of gold prices that has unhitched the gold market from the $35-per-oz. gold price for monetary reserves. Still, the system's durability depends chiefly on how fast the U.S. regains control over its inflation and persistent balance of payments deficit. As last week's rise in interest rates showed, the U.S. is still losing ground in that battle.