TRANSACTIONS IN GOLD

Press, Volume LXXXIII, Issue 25227, 4 July 1947, Page 10

TRANSACTIONS IN GOLD

INTERNATIONAL ASPECT The Internationl Monetary Fund announced a few days ago that members have been requested to prevent international transactions in gold at prices above exchange parities. The fund fears that, “unless discouraged, this practice is likely to become extensive,” and it deprecates the practice on the ground that it disturbs exchange stability and involves loss to monetary reserves since much of the gold goes into hands other than those of central monetary authorities. The fund does not object to domestic transactions in gold at prices above parit.?, unless they have the effect of altering exchange rates *for practical purposes or result in a significant weakening of the international financial position of a member of the fund. Members are also asked to secure the co-operation of non-members where possible. Sales to Free Markets Sales to the free markets have been mainly of newly-mined gold from Mexico, the South American countries, and Ethiopia. Of the non-members, Russia has been the largest seller to the free markets There has, however, been a movment in South Africa and Canada in favour of freedom in selling. The fund’s recommendation, if implemented. would have several effects, states "The Times,” London. Certain mines would have to close down in the countries concerned and some opposition to the recommendation is likely on that score. Presumably the more restricted supply would make prices rise in free markets. Another aspect, perhaps rather regrettable, is that many countries with mis-managed and steadily depreciating currencies would lose a chastening and obvious reminder of their mis-management. On the other hand, if free market prices could not be obtained by producers, this would itself increase the likelihood that certain countries would seek official depreciation of their currencies in terms of gold. If this tendency should eventually spread to the more important gold producing countries the results might ,of course, in the end be farreaching.