The golden yonder
THE STOCK markets of London and New York march onwards, and a friendly gold bug floats in with a riddle. How much gold, he asks, would you need to buy every share in the Dow Jones index, Wall Street's yard- stick? Quite a lot, I imagine. Wrong, says the gold bug: the answer is 'When?' Before I can stop him he is brandishing a chart, as gold bugs do. This shows that a hundred years ago you could have bought the Dow Jones index for an ounce of gold. Then share prices started to rise, and by 1929 the index would have cost you 18 ounces. You would then have been right to hang on for a couple of years and buy it for two ounces. In the 1960s you would have been able to sell it again for as much as 28 ounces. That would have been clever of you because at the end of the 1970s its price had come back to one ounce. Now buying the index would cost you more gold than ever. Mea- sured against gold, it has just gone through its high point of thirty years ago and out into the wide golden yonder. Would you chase it, asks the gold bug? Or would you hang on to your last ounce of gold and wait for the day when it would buy the index again? Anticipating my answer, he flits off to the goldfields of Australia to reserve himself some more.
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