The legion of hack travel writers who've described the streets of Dawson City as "literally paved with gold" are sort of telling the truth. Dawson, which lies at the scenic crotch of the Klondike and Yukon rivers in Canada's Yukon Territory, sprang up in 1896 during the Klondike Stampede, and a century after the first gold rush petered out, the latest global gold mania is again rippling village life in this town of 1,800. When I visit in the summer of 2011, with the price of gold at record highs, the very dirt under the city has become controversially precious. One prospector is pissing people off by trying to mine a local road. Rumor has it owners of the Westminster Hotel got into trouble for sinking a shaft under the saloon. By law, you can't start your own gold mine within city limits, though according to scuttlebutt, a few local householders are furtively mining their basements.

It's boom times in Dawson for a simple reason: Gold loves bad news. When the economy slumps, lots of people suddenly wake up to the frightening, psychedelic truth that our entire financial system rests on the internationally abetted illusion that government-issued pieces of green paper have intrinsic value. To safeguard their riches against inflation or, as some have it, the collapse of Western civilization, these people buy large quantities of a soft yellow mineral that also has no intrinsic value. So do daisy chains of speculators, and the price of gold goes up and up and up.

So now, with gold at 500 percent of its price pre–September 11, speculators and mother-lode seekers are pouring back into the hills and valleys around Dawson. A local aphorism estimates that out of every hundred miners to stake a claim, ninety-nine will lose their shirts. Still, fifty new gold-exploration companies have hit town in recent years. And claims have skyrocketed from 28,000 in 2009 to 80,000 in 2011. All of which is trailing the symptoms of an economy in overdrive. Unemployment is approximately ...