There was a time when the travails of gold reflected, even shaped, history's course. When World War I broke out, trading in America's many stock markets, and even the coffee and cotton exchanges, was suspended in response to the sudden increase in European demand for US gold; trading on Wall Street did not resume until four months later, when Americans finally understood they actually stood to benefit from a war that would massively shrink European supply and bolster its demand. In 1797, following rumors of a Napoleonic invasion that made London's City panic, the Bank of England - already beset by the costs of the Empire's transatlantic misadventures - said it would temporarily halt payment of gold in exchange for its bills. The consequent run on gold was so massive that the bank soon hastily emptied sealed gold cases recently plundered from Spain, and clumsily superimposed George III's image over his Spanish peer's - an improvisation that made one contemporary poet say the bank had "stamped the head of a fool on the neck of an ass." Today gold is in no position to cause such commotion. Since Richard Nixon's abolition in 1971 of the gold standard, the mechanism whereby the dollar's, and most other currencies', value was denominated and fixed in gold ounces, the yellow metal's clout and mystique have been on the decline. America's desire at that time to gently weaken the dollar (and thus finance more comfortably the growing costs of the Vietnam War) proved stronger than the monetary regime engineered by the Allies in the 1944 Bretton Woods Conference. Financially, to be sure, gold actually soared, as Nixon planned it would. Once freed to the markets' devices, the pre-'71, artificially-set rate of roughly $40 per ounce soon gave way to three-digit figures -an appreciation that made people understand how gold managed to go through all of World War II without exceeding the $34-to-$37 level. Industrially, however, gold could not establish a relevancy nearly as pervasive as most other commodities'. It was not coffee, that everybody wanted, or grain, that everyone needed, and certainly not oil, that every factory, plane, ship and car demanded. Even the much cheaper silver, which was needed by the photography industry, was more relevant in that regard. Politically, gold had pretty much become an anecdote. Gone were the times when every central bank needed, by law, to store tons of bullion with which to supply any demand for gold in turn for the bills it printed and the coins it minted. Instead, gold was reduced to what it had been for centuries and millennia: a luxury for which many people would pay, even a lot, but which for most people, most of the time, was more metaphor than acquaintance. And so the price of gold fluctuated much the way cocoa, sugar or pork-belly prices rose, fell and settled, reflecting the ebbs and flows of mundane supply and demand. So apolitical did this commodity become that even the collapse of the apartheid regime in South Africa, which was producing one third of the world's gold, did not seriously affect its price, which prior to Nelson Mandela's release traded at $400 an ounce and soon after it actually plunged to the $350s. The dissolution of the Soviet Union at the time, another major world producer, also failed to impress the gold markets, even when prices of other Soviet-produced commodities, like aluminum and paper, soared due to disruptions in supply. Set against this backdrop, one tends to also seek apolitical explanations for gold's behavior these days. GOLD'S RECENT appreciation has been astronomic. As of this writing, it has broken the $560-per-ounce barrier, more than twice its price half-a-decade ago, and a level at which it has not been for a quarter of a century. Surely there are some mechanical explanations for this leap, which includes a 10% appreciation this year alone, following an 18% rise in value last year. Unlike oil's appreciation in recent years, which is partly attributed to political trouble in places like Iraq, Nigeria and Venezuela, there is no disruption in the extraction and supply of gold, which still comes mainly from Australia, South Africa, Russia and the US. It follows that the cause of this turbulence must be sought in the demand side. There, one indeed finds - happily, at least from the viewpoint of those who want to see the world employed and prospering - that in India demand for gold has trebled in recent years, reflecting the rapidly rising purchasing power of its middle class, as well as a cultural obsession in the subcontinent with gold. Curiously enough, when gold appreciated sharply a decade ago, a similar explanation was offered, only then the big demanders with a "historic craving for gold" were not in India but in China, and the price increase at stake was not from $280 to $560 per ounce, but from $387 before Christmas '95 to $415 by February '96, which also settled, by the end of that year, at $369 per ounce. CLEARLY, gold's recent appreciation is, after all, related to things larger than what one commodity's traders are equipped to detect and decipher. To better understand what they are facing, gold traders would do well to set aside the charts and reports that are their daily staples, and instead, whenever repeating that the latest price is "a new 25-year high," just look more closely into what fueled that previous peak. In 1980 an ounce of gold averaged $612. It was the last year of the Carter presidency. Four years earlier, when he entered the White House, gold's monthly average price was a fifth of that, and by the end of Ronald Reagan's first year in office gold's monthly average price declined to $460. The following year it slid to $375. Evidently, despite its lack of industrial utility and diplomatic leverage, gold still remained a reflexive financial haven and potent political barometer. But what did this barometer detect that made it first react so erratically, then subside so sharply? Well, gold's decline in the 1980s came while the Iran-Iraq war tempered the West's fears of Iranian fanaticism's reach. Gold's climax the previous decade came when Carter failed to rescue American hostages in Teheran, the dollar was weak, American inflation was in double-digit territory, and doubts arose over the free world's ability to contain Khomeinism. In other words, gold appreciation expressed a deep universal concern for the world's security. Intelligence sources now say that one of those hostage takers has since become famous: His name is Mahmoud Ahmadinejad, and his job is president of Iran. And as he rose to prominence, so did gold, much the way it did back when George III's England thought it could bluff the markets with impunity. Then again, King George was mad, and Ahmedinejad is sane; isn't he?