The gold rout
By EDITOR Thomas Moore REPORTER Michael Rogers

(FORTUNE Magazine) – Comex celebrated the tenth anniversary of private gold ownership in the U.S. on New Year's Eve by displaying a metric ton of gold at its offices in the World Trade Center. Somehow there didn't seem much to celebrate. Within days the price of gold, continuing a steady slide under way since last March, / dropped below $300 an ounce on world markets for the first time since June 1982, leading some analysts to wonder if a full-scale rout was in the offing. The amazing dollar, which bucked lower interest rates and record federal and trade deficits in the U.S. to rally once again to new highs after the new year, was generally credited as the chief goldslayer. Gold rises when the dollar is weak and falls when it's strong. The slide in oil prices, which has led some traditional Arab gold buyers to unload, and other signs of disinflation have also taken the glitter off gold. Although U.S. investors were slow to buy gold once it became legal in 1974, they caught the bug fast when prices soared in the late Seventies, peaking at $875 an ounce in January 1980. Trading in futures contracts on Comex, which now handles 99% of the U.S. market, jumped from $5.5 billion in 1975 to a high of $548 billion in 1982; last year it fell to about $350 billion. Says Martin Mosbacher, a Comex spokesman, ''We've lost the smaller speculative investor in the past couple of years.'' Since 1980 the number of Americans holding some kind of physical gold, not counting rare coins, jewelry, and futures contracts, has plateaued at about eight million, or 4.6% of the adult population, according to the International Gold Corp., a marketing arm of the South African mining industry. South African Krugerrands are by far the most popular, accounting for about 75% of private U.S. gold holdings, with other gold coins, bullion bars, medallions, and gold certificates making up the rest. ''Gold has been trading recently as a foreign currency alternative to the dollar, rather than a collectible or inflation hedge, and will probably do a lot better if the dollar turns down sharply,'' says Eugene Sherman, chief economist with International Gold. ''What's scary is that we economists just don't know what moves foreign currency markets anymore.''