Page:Stabilizing the dollar, Fisher, 1920.djvu/200

146 But let us return to the contention that such bull speculation would be practically non-existent. The price movements needed for it seldom occur, and when they do occur are not foreseen. In fact, if price movements were so well foreseen, the evils which this book proposes to remedy would not be very serious!

Somewhat the same considerations apply to the opposite sort of speculation, that of the bear operator. But this type of operation,—first selling gold to the Government and then buying it back at a lower price some months later,—would amount to lending the Government temporarily an addition to its gold reserve. It would be helping the reserve when, because of its depreciation in value, it would need help. Practically, the advantage to the Government from such an operation would be small; for the possible bear operations would be limited to very small dimensions by the fact that only small amounts of idle gold bullion are available, i.e. could be, at any moment, found in stock outside the Treasury and so be capable of being immediately deposited there for the period of the supposed bear operation.

C. Unofficial Prices of Gold. We have spoken only of the official pair of prices of gold. These are like the two "gold points" in foreign exchange or the two limits used in the gold exchange standard. As distinct from these two official Government prices of gold bullion, the actual price in the open market might be at any point within these two limits, just as the price of foreign exchange may be any price within the "gold points."

The market price could never lie outside these limits. It could never exceed the redemption-price; for no one would pay more for gold than the price asked by the Government. Nor could it fall below the deposit-price; for no one would take less for his gold than he could get for it from the Government.

But, within the range set by these two official prices, the market price could float unhampered. Thus,