In the late eighties, the Japanese stock market was riding high. Some worried Japan would own the entire world, including all our golf courses. That was when I had a vision in a tiny shop not far from San Francisco’s Union Square.

Having visions isn’t a frequent event, so I need to tell you about the shop. It was filled with exquisite objects; all radiating the simple beauty only Japanese craftsman can create. Just standing in the shop filled me with a deep sense of peace, the feeling poet Ranier Maria Rilke called “repose .”

    The objects were also exquisitely priced.

    That was when the terror struck. Suppose we find ourselves living in another standard? Suppose that standard is much higher? Suppose we find ourselves in a world where everything we can afford is shabby, second-rate, and cheap? Suppose everything we hunger for is suddenly priced at levels beyond comprehension?

    This is not part of the American Experience. But most of the 6.3 billion  people who live on this planet have this trauma on a daily basis; witness how long a worker in Southeast Asia must work to buy a Big Mac.

    Could something like that happen to us?

    It may be happening right now. The federal government is spending more than $500 billion a year more than it receives in revenue.  The implied obligations of Social Security and Medicare are rising by a cool trillion a year.  We’re spending another $500 billion a year more on imports than our trading partners are buying from us.  And about half of all the dollars in circulation, about $350 billion, are living abroad. They “dollarize” nations with really bad currencies, provide a means of exchange for drug dealers, and otherwise grease the wheels of commerce, legal and illegal.

    The dollar is falling.  Recently, it has hit multi-year lows against the Euro and the Yen. Hardly a week goes by without a loud grumble about the overvaluation of the Chinese Yuan. Indeed, the only thing that appears to keep our currency from falling faster is that other governments would rather hold depreciating dollars than face mobs of unemployed workers.

    Which brings us to gold, the only “currency” without a government to ruin it. It was the best investment of the seventies, when it rose from $35 an ounce to $615 an ounce. Then it went to sleep for twenty years. Japan bubbled in the eighties. America bubbled in the nineties.
 Today our currency in circulation is about $700 billion.  We’ve got $147.3 million ounces of gold at Fort Knox.  Divide currency by ounces and you get $4,750 an ounce, about 12 times the recent price of gold.

    Is that what gold is worth?

    No. It’s just one measure. An older measure is that you can buy a good mans suit for an ounce of gold. So $4,750 an ounce would be a bit dear, even if you insist on an Oxxford or Brioni.
Then again, when was the last time you bought a suit for less than $400?
For gold, the seventies may be coming back.