Gold Hoarding Increases

Press, Volume CVIII, Issue 31782, 12 September 1968, Page 19

Gold Hoarding Increases

(N Z.P.A. Staff Correspondent) LONDON, September 10. Last year the hoarding of gold reached unprecedented heights, according to the 1968 annual report of the International Monetary Fund.

Gold worth SUS2IBO million was stored in 1967, three times as much as in 1966 and twice as much as in 1965 when gold fever also ran high. Moreover, the lust for gold was even stronger in the first quarter of this year, when SUSIS6O million worth was added to private holdings. Another SUS2IO million is estimated to have gone for industrial and artistic uses.

This very sharp increase in private buying of gold began in mid-October last year and was intensified by the devaluation of sterling in November and the subsequent loss of confidence in some currencies.

Gold production fell last year for the first time for 14 years. In 1966 it had been stationary. Excluding the output of Communist countries about which very little is known, world output dropped by 2.3 per cent to 40.3 million ounces worth (SUS3S an ounce) about SUSI4IO million.

In South Africa gold production fell by 1.1 per cent. Nonetheless, South African production constituted more than 75 per cent of total production compared with just over 50 per cent 10 years ago.

The I.M.F. report comments that it is difficult to estimate the trend of South African gold production over the next few years. The start of production of two new mines in early 1968, the implementation of new subsidy arrangements, and further technological innovation, especially a new rock cutter which is being tested, and, if successful could reduce working costs up to 20 per cent, would all tend to a further increase in output of gold. In its central economic mes-

sage for 1968-69, the report emphasises that the restoration of enduring confidence and stability in the international monetary system depends primarily on the achievement of progressive improvement in the external positions of both the United Kingdom and the United States. <

The restrictive budget adopted by the United Kingdom in March, 1968, the report sees as clear evidence of determination to deal energetically with its balance-of-payments problem.

the report finds the improvement in the United State deficit in the first quarter of 1968 “unsatisfactory” in light of the requirements of the international monetary system and of the United States goal of bringing the balance of payments to—-or close to—-equilibrium in 1968. To relieve pressures on American costs and prices, says the report, it has now become necessary for the United States temporarily to restrain demand expansion so as to bring the growth of real Gross National Product well below the capacity rate of 4 per cent. Pursuit of fiscal and monetary policies of the general character now envisaged, combined with the strengthened programmes of capital cor> trol, should make for a sub stantial improvement in tl»t United States balance of pa>' ments.

At the same time thos< Continental Europeat countries with unutilised capacity should, with due regard for stability, make full use of their margin for economic expansion so as to support the growth of world trade and promote the elimination of the disequilibrium in world payments.