n today's world of flat currencies, cut loose from the gold standard, we are sailing in uncharted waters. To float? To peg? To bind? Is anything as good as gold? Professor Friedman poses the question; six eminent economists and businessmen respond.

DISCUSSIONS of international monetary reform have generally scanted the difference between two superficially similar but basically very different exchange-rate arrangement is a unified currency: the pound sterling in Scotland, England, and Wales, and, at an earlier date, in Ireland as well; the dollar in the fifty states of the United States and in Panama; since the currency reform of 1983, the Hong Kong dollar and the U.S. dollar; farther back in time, the pre-world War I gold standard, when pound, dollar, franc, and Mark were simply different names for specified fixed amounts of gold.

The key feature of a unified currency is that at most one central bank has the power to create money-'at most" because a pure commodity currency does not require a central bank. The U.S. Federal Reserve System has 12 regional banks, but only one central authority (the Open Market Investment Committee) can create money. Scotland and Wales do not have central banks. Hong Kong does not have a central bank.
The maintenance of fixed rates of exchange between different parts of a unified-currency area is strictly automatic. No monetary or other authority need intervene. One pound in Scotland is one pound in England, plus or minus perhaps the costs of shipping currency or arranging book transfers-just as under the pre-world War I gold standard the rate of exchange between the dollar and the pound varied from $4.8665 only by the costs of shipping gold (yielding the so-called "gold points"). Similarly, 7.8 Hong Kong dollars is essentially simply another name for one U.S. dollar, plus or minus a trivial amount for transaction costs. It requires no financial operations by the Hong Kong currency board to keep the exchange rate there other than to live up to its obligation to give 7.8 Hong Kong dollars for one U.S. dollar and conversely. And it can always do so because it holds a volume of U.S.-dollar assets equal to the dollar value of the Hong Kong currency outstanding.

Retail sales of gold jewelry have exploded in 1998, attaining growth rates unseen in more than half a decade. Consumers are buying at a $20 billion pace thanks to a growing perception of value at mass and a confidence-building economy.

For as far back as statistics are available, that unit gain hasn't been matched, according to World Gold Council data (dating back to 1993) supplied by Audits & Surveys Worldwide.

It's a blossoming era for gold jewelry, particularly at full-line discounters, which are beginning to apply category management principles for several reasons: to raise the department profile; to make it semi-self service for greater impulse; and even to experiment with accessorization displays within ready-to-wear apparel.

These changes are long overdue and speak to a demystification of jewelry at mass--one that finally has tapped pent-up demand and unlocked the potential for greater department productivity.

"Gold jewelry has always been important to consumers' image of a store, says Michael Paolercio, chief executive officer of Michael Anthony Jewelers. "Mass has strived to achieve two goals: high GMROI and increased consumers awareness of their total merchandising effort in accessorizing apparel."

Trade sources confirm that gold jewelry generates nearly 100 percent of GMROI at mass, based on 45 percent to 55 percent margins and 1.5 to 2 turns annually.

"Aggressive mass outlets have learned that total gross margin dollars far outweigh the turn rate to their benefit," says president Anthony Paolercio.

Moreover, he adds, "People feel they can trust the value of gold jewelry in mass. Gold has intrinsic value, while diamonds are more of a blind purchase and costume jewelry has no intrinsic value."

The category's importance is easily demonstrated by better locations on the selling floor and greater investments ill fixtures made leading mass chains. Kmart now places jewelry departments on the main traffic aisle of every new store. Target has created an accessories core in the middle of ready-to-wear, with gold jewelry flanked by watches and costume jewelry, as well as belts and purses. Wal-Mart has built jewelry into its high-volume area across from high-traffic consumer electronics.