Actually, the gold fringes makes the flag a military flag. It is supposed to be flown indoor and by the military at special occassions.
THE AUTHORITY FOR FRINGE ON THE FLAG IS SPECIFIED IN ARMY REGULATIONS,
BUT ONLY FOR THE NATIONAL (MILITARY) FLAG !
The following is from the web site of The Institute of Heraldry:
Gold fringe is used on the National flag as an honorable enrichment only. It is not regarded as an integral part of the flag and its use does not constitute an unauthorized addition to the design prescribed by statutes. Records of the Department of the Army indicate that fringe was used on the National flag as early as 1835 and its official use by the Army dates from 1895. There is no record of an Act of Congress or Executive Order which either prescribes or prohibits the addition of fringe, nor is there any indication that any symbolism was ever associated with it. The use of fringe is optional with the person or organization displaying the flag.
And a 1925 Attorney General’s Opinion (34 Op. Atty. Gen 483) states:
"The fringe does not appear to be regarded as an integral part of the flag, and its presence cannot be said to constitute an unauthorized additional to the design prescribed by statute. An external fringe is to be distinguished from letters, words, or emblematic designs printed or superimposed upon the body of the flag itself. Under the law, such additions might be open to objection as unauthorized; but the same is not necessarily true of the fringe.
It is customary to place gold fringe on silken (rayon-silk-nylon) National flags that are carried in parades, used in official ceremonies, and displayed in offices, merely to enhance the beauty of the flag. The use of fringe is not restricted to the Federal Government. Such flags are used and displayed by our Armed Forces, veterans, civic and civilian organizations, and private individuals. However, it is the custom not to use fringe on flags displayed from stationary flagpoles and, traditionally, fringe has not been used on internment flags".
However, the U.S. Attorney General recently stated:
"The placing of a gold fringe on the national flag, the dimensions of the flag, and the arrangements of the stars in the union are matters of detail not controlled by statute, but are within the discretion of the President as Commander-in-Chief of the Army and Navy. . .ancient custom sanctions the use of fringe on regimental colors and standards, but there seems to be no good reason or precedent for its use on other flags. . .the use of such a fringe is prescribed in current Army Regulations, No. 260-10." (See 34 Ops. Atty. Gen. 483 & 485) The only statute or regulation, in the United States, prescribing a yellow fringed United States flag is Army Regulation No. 260-10, making it a military flag. By Army Regulation 260-10, the gold fringe may be used only on regimental "colors," the President's flag, for military courts martial, and the flags used at military recruiting centers. "A military flag emblem of a nation, usually made of cloth and flown from a staff; FROM A MILITARY STANDPOINT flags are of two general classes...those flown from stationary masts over army posts, and those carried by troops in formation. The former are referred to by the general name of flags. The later are called colors when carried by dismounted troops. COLORS AND STANDARDS are more nearly square than flags and are made of silk, with a knotted FRINGE OF YELLOW ON THREE SIDES. "
But most Americans are clueless about how to care for & display the US flag.