An enduring, and emotional, allure
Gold is attractive to wear and look at, but even more attractive to own as a commodity these days.
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Speculators can get rich when gold prices climb along with fears about inflation, David allows. "But speculators also take a risk the price will go down on good news – say, the US deals with its international-deficit problem – and they will lose money."Skip to next paragraph
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So what about the long-shot notion – kicked around some by at least one would-be presidential nominee – that America's economy ought to be built on a gold-brick foundation?
"I can't see going back," says David, who was on hand in Washington in 1971 when President Nixon announced that the United States was going off the gold standard. (Gold's role in the economy had been reduced in 1933 under President Roosevelt. But a remnant of the gold standard remained in the official US Treasury policy of selling its gold to other countries with surplus dollars.) "Yes, [the gold standard] restricted the creation of new money by the Fed and, on average, one result has been more inflation since its end," says David, probably eager by now to get back to his garden. "But ending that restraint has also meant lower unemployment, on average, and greater economic stability with smaller recessions."
That's a reasoned, gray-suit assessment. But behavior around gold isn't typically so sober. CBS News last month reported on Raffi Stepanian, an unemployed jewelry setter who has taken to prospecting in New York City – on the sidewalk along 47th Street, specifically – for "placer deposits."
This real-life Yukon Cornelius figured that residual gold flakes (and gemstone fragments) must have been carried onto the streets of Midtown by past generations of jewelry-makers in the district, settling in the cracks. Folly? At the time of the report, he was pocketing $800 worth of gold in a good week. Not so hard to see the allure.