U.S. AND BULLION: IN BARS WE TRUST?

Now that Americans are again permitted to own gold bullion, can widespread hoarding be far behind? Certainly many investors are likely to want to lay away some gold--just in case. A recent Gallup poll indicates that the greatest demand for the yellow metal will probably come from middle-class conservatives in the Western states, where vestigial distrust of Big Government and its powers to manipulate paper money remains strongest. Yet it is far from certain that the U.S. will become a nation of goldbugs, sinking lifesavings into 24-carat bars and furtively stuffing them under the floor boards. Says Harvard University Sociologist Lee Rainwater: "Americans tend to be optimistic about the future, and when you believe things will turn out well eventually, you're not that interested in hoarding gold."

Essentially, gold hoarding is a defensive measure, a hedge against some cataclysmic disaster such as a devastating war or total economic collapse. The world's champion hoarders are the French, who have learned through bitter experience--two centuries of ruinous wars, revolutions and often drastic currency devaluations--that a few kilos of gold buried in a flower garden are sometimes the only insurance against personal financial disaster. Almost half of the entire 8,900 tons of gold held privately in Europe is in France. Today's French goldbug, says Paris Financial Editor Rene Sedillot, "is apt to be a peasant or a workingman, not a sophisticated capitalist. It's no use telling such hoarders that they ought to buy stocks. In their eyes, gold is a tried and true friend. It's part of the setting of their daily lives, like their slippers, their dogs and their dining-room tables. They wouldn't dream of giving it up."

Yet a gold mystique has never tak en hold in the U.S. For one thing, there was precious little of it around in the nation's early days: almost 90% of the known world gold supply of 80,000 tons has been produced in only the last century. Even in the pre-Revolutionary period, when most of the major countries were still relying on metal currency, the colonists were widely circulating paper money of one kind or another to meet the needs of their growing commerce.

Except for a brief period during the Civil War, gold hoarding was rare in the U.S. during the 19th century; Americans seemed less interested in safeguarding what they had than in carving more wealth out of a continental wilderness. Adventurers who struck it rich in the goldfields of California or the Klondike generally exchanged their nuggets for goods or greenbacks as fast as they got them. Americans were largely unperturbed when the U.S. went off the gold standard in 1933 and citizens were forbidden to own gold bars.

Of course, the political and economic shocks of the 1970s have jarred the confidence of U.S. citizens to a degree that is still unknown. The extent of gold buying in the months ahead could well be a sign--and a measure--of how much Americans still believe in their Government, their institutions and themselves.

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