FALL IN GOLD

Grey River Argus, 6 August 1937, Page 8

FALL IN GOLD

LOWEST LEVEL IN YEAR Danger of Experiments The current quotation for gold of £6 19s 91d an ounce is not only the lowest rate this year, but also the lowest price since the end of September, 1936. In the third week of September last year the price of the metal had fallen to £6 17s 2RI an ounce, its lowest level for two years, but fol towing the revaluation of the franc and the Tripartite Monetary Agreement, the price was fixed at £7 Os 9d an ounce and from then to early in November it had risen to £7 2s Sid, the highest price for 1936. The past week is the first occasion on which the price has fallen below £7 since the monetary agreement was arranged. The fall is causing anxiety' in the market for goldmining shares, all of Which remain depressed. The price of the metal has shown a steady decline since the market scare in London in June, which sent, gold shares tumbling down to levels from which many' have not recovered.

The danger that a limit might, ho reached to the absorption by' Governments of new gold at present or higher prices was stressed by Mr John Martin. chairman of Rand Mines. Limited, at the annual meeting in Johannesburg recently. Additional importance attaches to Mr Martin’s views on account of the fact that he is also a member of the Court of Directors of the Bank of England. In absorbing gold, the motive of Governments, he said, was naturally to prevent the monetary situation getting out of hand and permitting commercial banks to give credit to any and every kind of project al any level of prices. Volume of Credit. Under the operation of the Exchange Equalisation Funds under the Tripartite Monetary Agreement, the volume of credit the authorities in America and Britain permitted was far less than would have resulted from the unimpeded operation of the old gold standard. Thus, he said, the Bank of England gold reserves at current market price amounted to £525,000,000 apart from the large gold holding in the Exchange Equalisation Account. Had these immense gold holdings been allowed to enter as a cash basis of credit instead of being largely neutralised, they' might, have Jed to inflation of credit on a scale without, precedent. Similarly, America’s present holdings measured in current dollar values would sustain hank credits twice or thrice as large as sufficed to finance Ihe boom of 1928-29. United States Purchases. “Latterly, America has been the only large gold buyer, mainly owing to conditions she created herself, in refusing goods and services in payment for exports,” went on Mr Martin. “Hence the recent crop of rumours of the alteration of the gold price, which persist in spite of the official denials, rumours which demonstrate to Ihe world the peril of further monetary' experiments, and the threat, to the progress of world recovery.” The higher price of gold and commodities had lifted the world from depression and suddenly reversing the process would be a calamity. Revolutionary measures should not be necessary to cope with the situation, said Mr Martin. Governments could permit a further gradual rise in prices to a level at which existing gold holding could be utilised for monetary purposes without the present scale of redundancy.