As the U.S authorized the purchase of gold bullion by private citizens for the first time in over four decades, one of the key men sitting at the center of the maelstrom of buy and sell orders was Dr. Henry G. Jarecki, chairman of Mocatta Metals Corp. It is the nation's largest bullion trading house, located in Manhattan's Wall Street area. A Yale-trained psychiatrist (he is still listed as a faculty member there), Jarecki became fascinated by the possibility of putting the high-speed computers and calculators used in patient diagnosis to work on the bullion market. After completing a textbook on psychiatry in 1970, "it seemed like a rational moment to move on," he says. Now he limits himself to a few private patients and doubts he will ever return to full-time practice. He insists his training gives him absolutely no edge in determining how the market will behave. In between phone calls and barking orders to traders in an adjoining room, he talked last week with Ron Scott of PEOPLE about the intricacies of buying and selling gold.

Is this the first time since 1933 that the public can legally own gold?

In bullion form, yes. American industries have been allowed for a long time to own gold bullion—subject to license—and private citizens have been allowed to own gold coins and, of course, gold jewelry.

Why the big interest in gold bullion now?

Like anything that has been forbidden for a long time, people think it's very exciting. The small gold buyers especially feel that way.

In what forms are Americans able to buy gold?

They can now buy gold through their banks in gold coins or bullion in amounts ranging from½ oz. "wafers" up to standard 400-oz. bars [worth $80,000 when gold is priced at $200 an ounce].

Have you decided whether to invest your own money in gold?

I would follow the advice I give my friends—invest 20% to 30% of your disposable assets. But I don't believe that people who have small amounts of money should be investing in gold.

How wealthy should a person be to consider gold as a worthwhile investment?

Basically he should have assets which he wants to preserve. A person with a minimum of $10,000 in disposable assets might want to put $2-3,000 into gold. Someone who has only what he needs for every day emergencies and commitments should not invest.

Given all its intricacies, is the gold market a very safe place for the novice investor with, for instance, $10,000 in life savings?

No more risky than the other places an unskilled investor can put his money, with the exceptions of savings accounts or municipal bonds. And even with these there is some small risk—you are never sure you won't catch cold.

Are savings accounts safer for the small investor?

First, I do not think you should be making a choice between savings accounts and gold. Savings and loans at least have some guarantee that the principal will be maintained. I think those that wish to diversify their holdings, to hedge their circumstances, will put a certain amount of their disposable assets in gold.

If a person is set on investing in gold, how should he do it?

First, he should know what his purpose is. This should not be his only investment. Because of the substantial brokerage, storage, and [potential] assaying fees, gold buying should be considered a fairly long term investment for the individual. He should know what he is going to do about storage and insurance. Secondly, he should deal with a reputable bullion dealer or bank. The gold should have a reputable bullion dealer or refiner's stamp on it so that it will be easy to identify and resell without being weighed and re-assayed—both are costly procedures.

Is the price of gold printed in newspapers each day the price at which Americans can buy small quantities?

No, that is the price large purchasers pay for gold. In smaller quantities, such as a½ oz. wafer or gold coin, there is an additional fabrication cost [usually around 8%].

How much would gold have to increase in value in order for a seller to recoup the costs of buying?

If you bought an ounce of gold today for $200 in a state that does not levy sales taxes, you would have to sell it for $215 to recover storage and insurance costs plus commissions. If you buy in large quantities, that same ounce would only have to bring about $208.

What is the futures market, and should small investors consider it?

The buyer in the futures market is ordering gold for delivery at some future date in hopes that the price will increase. The transaction fees are lower and there is no charge for insurance or storage because no commodity actually changes hands. Because there are usually large amounts of money involved in playing the futures [in Chicago the minimum contract is around $20,000], it is no place for the novice investor.

Is the value of gold relative, or is it intrinsically valuable?

Isn't everything relative? But by being divorced, as it has been, from supply and demand, gold reflects most precisely the appreciation or depreciation of the economy. The price of gold is not determined by mining output or industrial demand. If another ounce were never mined, the world would get along fine. There is a psychological desire to own gold, for sure, but that does not make the desire any the less real. Comfort is psychological.

What is likely to happen to prices after Americans have fulfilled their gold-buying urges?

I think that depends on a broad number of factors. Your question assumes, perhaps correctly, that there is limited absorption on the part of the U.S. If that is true, and if there are no new problems—wars, droughts, famines and political unrest—which cause gold prices to rise because of society's distrust of paper obligations—the price of gold might fall substantially. That is especially true if the U.S. government sells a substantial quantity of its gold.

But if there is new stress elsewhere in the world, those people who bought gold to sell it to Americans might hold on to it longer and force Americans to buy it at increasing prices. Those are the factors—essentially the markets are as random, and unpredictable, as humans.

Is that why many large banks [First National City Bank and Bank of America] are reluctant to get involved in the gold market?

Perhaps. Banks are properly cautious; they don't want to get involved in something before they have learned how to walk. But eventually, I think more and more banks will offer it to their customers especially if the demand is large. Selling gold over-the-counter has been fairly active for banks in countries where it has been permitted.

If there is a huge demand for gold, and the price is pushed up world-wide, wouldn't that plunge the world into deeper economic chaos?

No. Gold price rises have no impact at all. They are simply a measuring rod. If your body temperature is 106°, it only indicates that something is wrong with your body. Gold prices are only warnings, the same as a fever.

You mentioned that gold is particularly valuable in times of depression. Does that mean that the typical gold buyer is also a doomsayer?

Yes, gold buyers tend to fear the worst. In the past they have predominantly come from the Far West and are politically right-wing. Now buyers are more broadly based because there is a different mood in the country—there is general distrust of government.

As a gold dealer what are your sources of advance information?

None whatsoever. Many people don't believe my ignorance—and I use ignorance in the specific sense: failure to know—because they think a gold dealer must be something special. All we do is use high speed calculations to make a difference in the prices at which we buy and sell. That's all. I just don't believe the human race is predictable. Only the mentally ill are, because they have a limited number of responses, and I don't believe the world's financial ailments have reached the point of damaging our minds yet.

What do you think will happen to the price of gold?

It may sound paradoxical, but I hope the price of gold goes down. The world with a high gold price is not a pleasant world. Low gold prices exist in a world where people trust each other. High gold prices cause trouble.