Get Ready! Get Set! Gold!

Beginning this week, Americans can buy, hold and trade gold bullion for the first time since Franklin Roosevelt banned private ownership of the yellow metal 41 years ago. The lifting of the ban, effective Dec. 31, is surely the most passionately awaited marketing event since Repeal reopened the nation's borders to the world's eager distillers. In hopes of an American stampede into bullion, speculators from Amsterdam to Zurich to Johannesburg have engaged in a considerable gold rush of their own. Last week alone, the price of "free market" gold traded on the London exchange climbed by $7.50 to a record $195 per troy ounce.* That was up from $155 just four months ago, when Congress passed the law lifting the ban, and represented a 75% increase in the price within a year.

Myth-Encrusted Metal. The trading up in London represents a faith by many holders and dealers in gold in the U.S. and abroad that the U.S. is full of investors anxious to trade their shrinking dollars for a few ounces of the world's most myth-encrusted hedge against inflation. Those who are betting that this is so point to a Gallup poll commissioned by New York's Mocatta Metals Corp., the nation's largest bullion dealer (1974 sales: about $2 billion). Taken in early November, the poll showed 18% of 1,557 adults felt they were at least "fairly likely" to buy bullion when it became legal. Projected nationwide, that 18% would translate into 12 million potential customers. Yet the survey found that few of those interested in buying gold stood ready to sell their stocks or gut their savings to invest in the metal. Indeed, 60% of the potential buyers said they would purchase under $500 worth initially. But all the purchases, say Mocatta officials, could total a $4 billion market.

More cautious projections, though, suggest that the Great Gold Rush of 1975 may turn out to be a walk at best, with total sales as low as $900 million, for several reasons. After coping with rising prices for necessities, Americans do not have much money left to commit to a purely static and defensive investment that pays no interest or dividends. Prospective buyers have also become increasingly aware in recent weeks of the risks and expenses in owning bullion. So, too, have some banks, where most of the gold is expected to be sold. The nation's two largest banks, San Francisco-based Bank of America and New York's First National City Bank, both decided last week not to offer gold at retail, citing the metal's price volatility and high cost of acquisition.

Poor Timing. For different reasons, Washington, too, is uneasy about legal bullion. The ban on private ownership is being lifted as one step in a long-term U.S. effort to "demonetarize" gold --that is, unlink it from currency values and turn it into just another commodity the price of which can go down as well as up without affecting --or afflicting--the international monetary system. But some officials, among them Federal Reserve Chairman Arthur Burns, feel that the timing is poor. Worried that gold sales will siphon away capital needed for conventional investment, Burns last month urged Congress --unsuccessfully--to delay this week's legalization by six months. The Treasury Department, for its part, is concerned about a massive flow of dollars abroad in pursuit of foreign gold. To minimize this outflow, U.S. Mint Director Mary Brooks will release up to 2 million oz. of bullion, or $380 million worth at last week's price, from the Government's 276 million-oz. stockpile for sale at auction to precious metals dealers and other big bidders on Jan. 6.

Meanwhile, the race to market the yellow metal is on. Banks, brokerages, gold dealers and commodity exchanges have mounted advertising campaigns aimed at prospective buyers. Major refiners such as New Jersey's Engelhard Minerals & Chemicals Corp. have been emphasizing the prudence of buying bullion imprinted with a recognized brand name. New York's Continental Gold Corp. ran full-page newspaper ads picturing gold bars printed with the Communist hammer and sickle; the firm, which gets the bullion from Moscow's Bank for Foreign Trade, claims to be "the only U.S. direct distributor of Russian gold in all sizes."

Basically, there are two ways individual Americans can now get into gold:

BUYING BULLION. Through dealers and banks that choose to sell the metal, Americans can buy bullion direct in several sizes ranging from 1/2oz. wafers to standard 400-oz. bars. Although commissions and other charges could add as much as 25%, the basic price on any given day will be the one that is fixed at the London Gold Market--actually, an office at N.M. Rothschild & Sons, where representatives of five international bullion dealers meet twice each business day to weigh buy-and-sell orders and establish gold's price. Once he makes his purchase, the investor can take the gold home with him, or he can have his bank or dealer give him a certificate and store it for him.

PLAYING THE GOLD FUTURES MARKET. Six major U.S. commodity exchanges, as well as some brokerages, will now offer gold futures contracts. Highly speculative and not for the novice, the contracts are agreements by investors to buy or sell predetermined amounts of gold at predetermined prices at specified future dates. On the Chicago Board of Trade, the minimum contract is for 96.45 oz., around $18,000 worth at current prices. To experienced investors, the advantages seem clear enough: contracts can be bought on about a 10% margin and allow profits to be made on fluctuations in gold's price without buying bullion, storing it and insuring it.

What will happen to those prices? Some European dealers are forecasting a period of wild swings as a mass of U.S. investors and speculators join and begin to move in and out of what has been a historically thin market. Others suspect that the U.S. experience will parallel that of Japan, when it lifted a similar bullion ban in early 1973. After an initial surge of buying, interest waned rapidly as the world price dipped.

There are other hazards in buying bullion, not the least of them the possibility that all that glisters may not be gold. Even experts must use a drill to tell a gold-plated bar of tungsten from the real thing. Worries Gerald Boltz, chief of the Securities and Exchange Commission's Los Angeles office: "I can see all the con men, the blue-suede-shoe guys, gearing up." To play it safe, those Americans who want in on the gold rush should deal with reputable sources, store their bullion at the bank or brokerage where they bought it, and carefully weigh what they are getting for their money against alternative investments for their savings.

* Equal to 1.097 standard ounces and named after the French town of Troyes.

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