EXPECTATIONS BELIED

Press, Volume LXX, Issue 21082, 6 February 1934, Page 9

EXPECTATIONS BELIED

DEVALUATION OF THE DOLLAR EXCHANGE FLUCTUATIONS SITUATION ABNORMAL AND CONFUSING (UXITED I'HKSS ASSOCIATION'—IIY ELECTMC TELKURAPII—COPYRIGHT.) (Received February 5, 10.40 p.m.) LONDON, February 5. "The Times" says that so far the effects of President Roosevelt's policy are contrary to what was intended in Washington. It was hoped that the fixing of the gold value of the dollar at a lower point than the existing exchange rate would cheapen the dollar in terms of other currencies. Instead the dollar has risen slightly in relation to the franc, and considerably in relation to sterling. Buying gold currencies in order io exchange gold for shipment to New York is likely to continue until internal prices rise in America, reducing the purchasing power of the dollar to the level of the new gold content. The present situation is abnormal and confusing, and must impose an increasing strain on the franc. The deflation of the franc is certainly not helpful towards world recovery. THE GOLD BULLION STANDARD EFFECT ON FINANCIAL WORLD (BRITISn OFFICIAL WIRELESS.) RUGBY, February 3. Commenting on the situation caused by the return of the United States to a gold bullion standard the city editor of "The Times" says that the action has caused two strongly opposed movements. The first is a rush to buy gold in the cheaper markets of Europe and sell it in the dearer market of America, and the second is a rush to buy dollars and dollar securities. The second movement has been more powerful in its influence than the first, despite plans for very large shipments of gold to America. The writer mentions that there is at present no sign of the American exchange stabilisation fund being brought into operation for the purchase of francs and pounds to eliminate the premium of the dollar over the gold franc, which, so long as it remains, will induce gold shipments to America. These shipments are being made by private institutions and not by the United States Government.

The foreign exchanges market was again busy to-day, the outstanding feature being the recovery of sterling compared with the leading gold currencies. The American dollar depreciated from an over-night rate of 4.90J- to 4.93!..

Interest op the Stock Exchange remained centred in the goldmining section to the exclusion of other departments, which remained quiet. Mining shares continued to move upward, although the gold quotation to-day was Is 3d down at £6 18s 3d a fine ounce. Much gold is flowing to the United States. FORTUNES MADE IN GOLD BOOM SHARE-HOLDERS BENEFIT LONDON, February 4. The Berengaria and the Bremen, bound from Southampton for New York, took £ 5,500,000 worth of gold. The former shipped £1,500.000 more at Cherbourg from the Bank of France. Amsterdam sent £1,800.000 worth from the Netherlands Bank. The city is full of stories of fortunes made and being made in the boom in goldmining shares. The "Sunday Express" calculates that there has been, an appreciation of £5,000,000 in the value of leadingshares in the last week. Mr H. G. Latilla, one of the pioneers of the West African goldfields, has seen his holdings appreciate by nearly £1,000,000. Mr Geoffrey Hart, a partner in a firm of stockbrokers, who has been buying gold shares for 12 years, says he made approximately £200,000. The Marquess of Queensberry and others have done well. SOVEREIGNS WORTH £2/0/6 AUSTRALIAN QUOTATION SiTDNEY, February 5. In consequence of the new record price for gold established on the London market Australian banks have raised their quotations for sovereigns to a new record level of £2 0s Gd each. 1 Sovereigns arc not subject to speculation in New Zealand because their export is prohibited. It is illegal for gold buyers to purchase them and later melt them clown to secure their gold content. The banks will, of course, pay £1 for sovereigns, but it is stated that very few arc ever surrendered for such an exchange.]