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Gold has always had a particular fascination for Old World investors, who have learned from grim experience that wars, revolutions and political strife can demolish less durable forms of investment. In France, the lust for gold remains as strong today as it was nearly two centuries ago when the National Assembly tried to spend its way to prosperity by issuing 400 million units of a paper currency called the assignat. Within five years, 50 billion of the worthless scraps were circulating, gold had jumped 600 times in value, and hoarding proliferated, even though the government made efforts to deal in the metal punishable by death.
Today, along with bullion sales to oil-rich sheiks, monied Asian merchants and Europeans, there is surging demand in the U.S. Of the 54.2 million oz. of gold that entered commerce worldwide last year, almost one-fifth−11.5 million oz.−was sold in America. The largest jump has come in the purchase of South Africa's heavily promoted Krugerrands. Last year the apartheid government in Pretoria minted 6 million of the 1-oz. coins, and nearly 3.7 million were imported by the U.S. That is more than twice as many as were bought the year before.
The largest bazaars for the purchase and sale of the metal remain in London and Zurich. As it has been since 1919, the worldwide price has been set twice a day on the London gold market by five of Britain's leading dealers in bullion. They meet in the offices of N.M. Rothschild & Sons, the City bank, and agree upon a price at which all are prepared to trade in the metal that day. Meanwhile in the U.S. an enormous and highly speculative market in the trading of gold "futures" contracts has developed on the New York Commodity Exchange and Chicago's International Monetary Market.
Nearly 60% of the gold that is sold ultimately becomes jewelry. In the U.S., it is marketed in shops from Beverly Hills' gilt-edged Rodeo Drive to Manhattan's grubby but thriving diamond district along West 47th Street, where wholesalers are constantly weighing their wares and repricing them as each new twitch in the gold markets alters their value.
Gold fever in the U.S. is so widespread that it is no longer accurate to speak of its victims as if they were right-wing zealots haunted by nightmares of starving marauders. A more typical buyer is New York Suburbanite Phillip Knapp, who is vice president of a paper firm. With a wife, three children and a six-figure income, Knapp seems every bit the successful American who ought to have confidence that the future will be as good to him as the past has been. But says he: "In 1975 I started to worry about where I could put my money. I say one thing to myself: it's not the franc or gold or silver that is going up, it's the dollar that is going down, and that's what worries me. Soon we will all be making $100,000 a year, and instead of increases in buying power we'll have $1 candy bars."