Bullion goes berserk as investors chase it to mid highs
Spectacular and ever increasing jumps in the price of man's most treasured metal have become almost routine: from $400 per oz. in October to $500 in late December, to $600 in early January. Last week gold left even its most frenzied boosters gawking in astonishment. In five wild and erratic trading days it leaped by an incredible 34%, closing the week at $808 in New York, at $823 in Hong Kong, $835 in London and Zurich.
It was one of the most dazzling run-ups in history, and it underscored the enduring psychological lure of the yellow metal as the most consistently sought-after possession in times of strife and uncertainty. Concludes Sociologist Neil Smelser, author of Theory of Collective Behavior: "The gold rush is a classic case of panic. The people who are dealing in gold are operating under the fantasy that the world economic structure is going to collapse. They are living by the myth hat the only thing that will survive is gold." Harvard Social Psychologist Roger Brown compares the panic to he rush on the gates of the Who concert in Cincinnati that left eleven dead. Says he: "The fear that they are going to be too late and left out causes people to stampede." Adds
Psychologist Edward Taub of Maryland's Institute for Behavioral Research: "What we are seeing in action here is the law of positive reinforcement. Translated into lay language, that means greed."
Even in normal times gold has held a special attraction. As Jacob Bronowski wrote in The Ascent of Man: "Gold is the universal prize of all countries, in all cultures, all ages." Charles de Gaulle spoke almost lovingly of "gold, which never changes, can be shaped into ingots, bars, coins, which has no nationality, and which is eternally and universally accepted as the unalterable fiduciary value." From the biblical references to the gift of the Magi, to the modern-day totem of triumph in Olympic competition, gold holds a mystic promise. Says Smelser: "Gold resides in the subconscious of man as a tangible symbol for all the fantasies that are completely positive."
Last week other precious metals continued to share that positive attraction. Silver, which has been climbing along with gold, rose during the week from $39 per oz. to $47. Platinum, the costliest precious metal of all, and one with many high-technology uses as well, climbed to yet another record of $918 per oz.
Shares of gold-and silver-mining companies leaped on Wall Street, as did the stocks of many so-called asset companies. Unlike financial, service or processing firms, the corporations that possess coal, oil, timber, copper or other resources have assets that retain value no matter what happens to inflation, the dollar or the economy.
Yet it remained the swelling demand for precious metals, and the almost total absence of sellers, that kept markets in a weeklong state of 24-karat chaos. In the burgundy-carpeted, octagonal trading ring of the New York Commodity Exchange, where each day's worldwide price surge climaxed, there was unrestrained pandemonium. Brokers and dealers screamed buy orders in a deafening din that continued practically without interruption from 9:25 a.m. until the closing bell at 2:30 p.m.