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Those who trade in gold should logically be as euphoric as Forty-Niners striking a new lode. But logic does not govern this market. "It's terrible now," says Richard Lowrance, 23, a trader who fills customers' orders at the Chicago Mercantile Exchange. "Since gold went over $350 an ounce, the volatility has increased fivefold. Our volume has dropped 50%."
While Lowrance glooms over gold's fickle ways, he is suddenly surrounded by gold-jacketed runners and other traders clad in bright red, green and purple coats. They talk excitedly about a broker's blunder: the man has made a mistake in filling out a customer's order, and it will cost him $2,500. A runner asks: "Does that mean we won't be going out to dinner tonight?" "No," answers a trader. "It just means we'll be going to McDonald's."
Hiding the Heat
The crunch made a big front-page splash in just about every newspaper. But the Wall Street Journal, forced by its staid though successful format to use only a single column on page one for the story, had to bury considerable news inside. The paper felt obliged to provide readers with a guide, which ran on the front page:
"A top government official warned that some big-bank failures may lie ahead, partly as a result of the Federal Reserve's actions. See story on page 3. For an explanation of the Fed's new approach to monetary policy, see page 7. In St. Louis, officers of the Federal Reserve Bank there were pleased because they had long advocated such a move. See story on page 6. In the nation's money markets, large certificates of deposit and other short-term instruments quickly matched the one-point rise in the discount rate. See story on page 2. Foreign-exchange traders, happy about the Fed's actions, sent the U.S. dollar up by 2%; gold fell more than $17 an ounce. See story on page 3. But the U.S. stock, bond and commodities markets were less sanguine. See stories on pages 47, 37 and 38."