Gold on Margin

The voluptuous feeling--illicit in the U.S., agreeable anywhere--that comes from possessing a bar of gold is now available to anyone for a down payment of $34.

Canadian law since 1956 has permitted the private purchase of gold bullion, and some banks have developed a modest sideline in the purchase, sale and storage of gold bars for clients. Last week the Toronto firm of Doherty Roadhouse & Co. advertised a fresh wrinkle: margin buying. Within an hour after Partner John Rogers opened the books on the new scheme, $140,000 in orders snowed down on his desk; inquiries crackled in by the hundreds from the U.S.

Doherty Roadhouse tailored its service to the varying requirements of its potential customers. A kilogram (32 troy oz.) bar of Canadian gold approximately the size and shape of a 10-c- chocolate bar sold for $1,126 (at the Toronto price of $35.20 an ounce). For the Rolls-Royce trade, the large-size bar (400 oz.) cost $14,080.

The chance to own gold bars holds an appeal for both ultracautious and speculative buyers. Investors willing to pay cash, forgo dividends and interest, and accept the hazard of a gradual decline in the buying power of their money, can get high safety and liquidity. Speculators can buy a 1-kilo bar for as little as $34 margin plus $63 a year on the unpaid balance, stand to turn a handsome profit if the price of gold should rise. In effect, they bet that the U.S. Treasury, which has been able to corner more than half of the free world's gold supply with its standing offer of $35 an ounce, will not peg the world price of gold indefinitely at the level it set in 1934.

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