Warning on gold

Press, Volume CXIV, Issue 33493, 26 March 1974, Page 11

Warning on gold

(N.Z.PA.-Reuter—Copyright) WASHINGTON, March 25.

The managing-director of the International Monetary Fund has given a warning that an increase in the official price of gold, 5U542.22 an ounce, might add to world-wide inflationary pressure.

Mr Johannes Witteveen noted, in a television interview, that some important countries were opposed to an increase in the official gold price. In the last week there has been increasing speculation in Europe that the main industrial countries might agree to -raise the official price to near the private, or free, gold price of around SUSI 73 an ounce. On Friday, the United States Treasury repeated -its opposition to such a move, arguing that raising the price might restore gold to the centre of the monetary system at a time when there was agreement that its role should be reduced. Mr Witteveen, noting that the free market price was unstable, said that it would be much better, in a reformed monetary system, to

have a stable unit of account as a principal asset for settling international debts. Asked whether the floating of the French franc had raised the spectre of a world trade war, the chief executive of the J.M.F. replied that the way the French authorities had managed the currency’s movements-in the exchange market was “quite reassuring.” “I feel confident that in the close consultations we have in the International Monetary Fund we shall be able to prevent this danger of a world trade war occurring,” he said.

Mr Witt veen added that he regarded the prospects of the Common Market’s achieving monetary integration and a common currency by 1980 as very dim. Such integration required a certain amount of political integration, too. and meant countries giving up some of their political autonomy, he said.