GOLD "BOOM."

Auckland Star, Issue 154, 2 July 1934, Page 9

GOLD "BOOM."

| DRASTIC ACTION. TULLAMORE SHARE SCANDAL. DETECTIVES CALLED IN. (From Our Own Correspondent.) SYDNEY, June 26. For some months past there has been unusually active speculative buying of gold shares on the principal Australian exchanges. In Adelaide, where the dealings are mostly in Westralian gold mines, which are threatening to revive, the competition has been extremely keen, and on one day recently about 300,000 shares changed hands —a record for the city. At one call during that week one stock rose from 8d to 9/G, another from £11 to £15 10/, and another from 2/ to 41/. Over 10,000,000 shares have been bought and sold in Adelade since the beginning of the year; and an ingenious statistician, taking market values as a basis, has calculated that the capital values of alt these ventures must be about £40,000,000. This would mean that these mines are likely to yield in the immediate future at least 8,000,000 ounces of gold, which is about equal to nine years' average production. These figures are enough to suggest the extravagant hopes apparently entertained by the people who have been enjoying a "flutter" recently on the Adelaide Stock Exchange. In Sydney, though the gold fever has not soared to such heights, there lias been a very largo amount of speculation, which appears to be for the most part unjustifiable. Last Wednesday "Smith's Weekly" expressed its views on this subject as follows: "Gold nerves and gold fever—Sydney is suffering from them. The greatest racket that could be devised, founded on respectability and backed by the integrity of the Stock Exchange, has grown, almost overnight, to such dimensions that in the interests of the State it must be smashed." On similar lines, tho "Labour Daily" held forth last Saturday: "High-pressure salesmanship has succeeded in drawing into the gambling net thousands of people new to the methods of the Stock Exchange, and with the lure of easy riches and big profits, buying orders based upon a small margin have deluged every promoter who has floated a winning proposition, no matter how nebulous, during the past few months." There is plenty of evidence to show not only that there has been a tremendous amount of speculation here in mining shares, but that there has been a widespread suspicion that "everything is not quite straight" about some of these ventures. A Staggering Report. On the Sydney Stock Exchange an important part in this recent boom has been played by Tullamoro scrip. Tullamore is situated not far from Parkes, about 340 miles west of Sydney, and the returns from certain assays supplied to the directors from this district promised a very rich reward for the fortunate holders. There was very keen speculation in Tullamore Gold Development scrip; and when contributing shares ran up to over 30/ a great many brokers sold "short" for future delivery. But the directors, who had become suspicious about the original assays, had applied to the Mines Department for an oflicial examination. Two Government geologists visited Tullamore, and were so surprised at the result of their first attempt that they made a second examination. The second assay confirmed the first, giving a return of only 2dwt per ton for the best samples, and from Ogr to 16gr per ton for the rest.

When the directors received this staggering news they took the only honourable course open to them by communicating the facts and figures at once to Mr. Steel, chairman of the Sydney Stock Exchange, suggesting that all dealings in Tullaniores be held up for the time. Mr. Steel had in the meantime received the report from the Mines Department, and promptly issued an embargo on Tullamores. All quotations in this stock were suspended on 'Change for two days, and the shares, which had dropped from 33/6 to 14/6, and then to 9/0, on the first rumour of danger, stood at only 3/ to 4/ after this compulsory interval. But the mines report had attracted official attention elsewhere, and the Commissioner of Police—apparently at the request of the Tullamore directors—took the matter in hand. Detectives are now hard at work examining the books of a large number of brokers and others concerned in these dealings.

Time Bargains Prohibited. It is now admitted that the reports on the Tullamore ground previously published "were not representative and were misleading," and evidently there has been dishonesty somewhere. Unfortunately this speculation has proved disastrous to many people who, in some cases, have invested the whole of their savings in these illusory shares. Questions that have been asked in Parliament have been answered that tho Government is keeping an eye upon these insidious activities.

It is probably in response to the interest thus displayed that tho Stock Exchange has now placed a ban on all dealings for forward delivery. The chairman announced last Thursday that, "until further notice, all time bargains will be prohibited," except those necessary to cover current transactions. This new regulation will effectually prevent the "bears" from overselling further and thus reaping another, rich harvest from Tullamores "on the down grade," and as buying and selling "for forward delivery" is the essential factor in stock exchange speculation on a large scale, no doubt this restriction will produce a good, effect. Probably those who have suffered most during the recent boom will be wiser in future. For the rest, it does not seem probable that any Stock Exchange embargo will prevent gambling'in shares—unless and until a generation arises to which the lure of get-rich-quick methods appeals no more.