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in the form of jewellery
or contained in commercial products or forms part of the large private stock of
bullion held for investment purposes. Investment gold in private hands is
estimated to be around 20,000 tonnes. Much of the private gold in France
(one-fourth of the world’s privately owned gold stock of $15 billion) is
reputed to be buried in gardens, hidden under mattresses or in clothes closets,
while 4,000 tonnes of gold are believed to have been converted into jewellery
in India, much of it illicitly.
    Many Vietnamese refugees in the 1970s
escaped with enough gold to establish a new life in America. It would be
difficult to persuade the boat people that they were wrong to abandon the now
worthless South Vietnamese piastre.
    India has been described as the ‘eternal
sink of gold’. Indians venerate gold as a sacred symbol of the Indian goddess
of wealth and treat it as an essential ingredient in almost every social
ritual. A child is given gold at its birth and the bride receives gold as her
personal property when she gets married. As a status symbol, gold has no
rivals. Most of all, gold is valued in India, as elsewhere, as a sure hedge
against inflation. Gold has become an indispensable possession for every Indian
family. Even the poorest hoard it. India has little gold of its own and since
1947, the government has banned all gold imports. At once, the gold smugglers
moved in. Dubai, on the Persian Gulf, has become one of the most important gold
trading centres in the world regularly used by smugglers shipping millions of
dollars worth of gold bars from Europe to India and Pakistan. Dubai imported
259 tons of gold in 1970: only a fraction of that remained in Dubai, the rest
was quickly exported. The smugglers’ launches are indistinguishable from
thousands of genuine fishing boats operating off India’s immensely long and
open coastline.
    Among the oldest pieces of gold jewellery is
the funeral mask of Tutankhamen (1400 bce ).
It was discovered by Howard Carter in 1922. It is now in Cairo Museum with many
other fabulous gold items.
    Among the most renowned, modern pieces of
gold jewellery is the Prince of Wales’ investiture crown. It is of solid
22-carat gold. Originally, it was hoped to have it made entirely of Welsh gold
but there was not sufficient available.
    As part of a campaign to eliminate gold’s
official monetary role, the International Monetary Fund in September 1975
abolished the official price of gold, and decided to dispose of one-third of
its stock. Half this amount would be returned to member countries in proportion
to their IMF quotas, the rest to be sold on the free market. The difference
between the official price, US$42.22 per ounce, and the price at which the gold
was sold would be used for the benefit of developing countries.
    At the first auction in 1976, the IMF sold
121 tonnes of gold. After early unease and some drastic price weakness, the
market absorbed the IMF supplies with some equanimity.
    In 1976, USA produced 32 tonnes of gold—3.2
per cent of the free world’s gold output that year. USA is the world’s largest
industrial market for gold, absorbing between 10–20 per cent of the world’s
supply.
    In 1975, American citizens were allowed to
buy gold coins.
    An American news agency report from London
in 1980 quoted Hill Samuel’s gold expert, Julian Philips, as saying that Saudi
Arabia planned to build up its gold reserves to US$8.8 billion by the end of
1980 and then by a further $3.05 billion a year. According to him the first
purchases, totalling 3,000 tons, took place between 15 July and 12 September
1979. Most of these purchases probably came from the Soviet Union.
    William Rees-Mogg, editor of The
Times , is among those who firmly believe in gold. He argues that
in circumstances of instability, the attraction of gold as an investment is
greatly increased. Gold has a unique combination of qualities. It is a real
asset in the same way as other commodities, or land, or