Fever Chart

Since war's end, the economic health of the world's currencies has been measured by the fever chart of unofficial gold prices. As people lost faith in their currencies and the financial condition of their countries, they scrambled to convert paper money into gold. The price of gold in India, China, Greece and other nations rose as high as $70 an ounce, v. the official rate of $35.

While demanding that the International Monetary Fund boost the official rate, the gold-producing Union of South Africa devised a slick trick. To cash in on the high unofficial gold prices, yet not break the fund's rules against selling monetary (24-karat) gold at premiums, it began selling premium-priced 22-karat gold in the form of crudely made goblets, statuettes and other "artistic" trinkets, e.g. spoons weighing 1/2 lb., that were ideal for hoarding.

Crossed Fingers. By last week there was a significant change in the fever chart: the price of gold was dropping all over the world. In the free market of Tangier where many of South Africa's premium sales were made the price was already down to $36.90 an ounce off more than $1.50 in a month and below the level where South Africa can make its premium sales pay. In France the price had tumbled to $38.25. In Milan and Hong Kong the story was the same. All over the world, said Manhattan's Franz Pick, publisher of a high-priced ($20 a month) report on world currencies, hundreds of small gold dealers were going out of business because of falling prices.

The drop in prices was partly caused by the South African gold and the great outpouring of hoarded gold from China since the Communist victory. But the biggest and most significant cause was the improvement in economic conditions in France, Britain, Italy and The Netherlands, and the renewed confidence in many of the world's currencies since devaluation. Though monetary experts still kept their fingers crossed, that drastic cure was apparently working. (However, in Iron Curtain cities such as Bucharest, gold was still bringing $68 an ounce, though even there it was beginning to drop.)

Complete Cure? The renewed faith in Western European currencies was reflected in their rising value in terms of U.S. dollars. In France, for example, the black-market franc was selling close to the official rate (in dollars). Last week there was talk in Paris of full stabilization of the franc, possibly on a fixed exchange rate with the dollar, and removal of exchange controls.

No one thought that the world's sick currencies were close to a complete cure--or might not suffer a relapse--but the drop in gold fever was the best news in months from the bedside.

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