Manawatu Evening Standard. SATURDAY, SEPT. 23, 1933. THE PRICE OF GOLD.

Manawatu Standard, Volume LIII, Issue 254, 23 September 1933, Page 6

Manawatu Evening Standard. SATURDAY, SEPT. 23, 1933. THE PRICE OF GOLD.

These are days when the price of gold is reaching’ high levels in terms of sterling. On Wednesday the quotation per line ounce was £G 13s 9d, with a recession of one shilling twenty-four hours later. A glance at the table published in the “Standard” shows that, with various fluctuations, gold has steadily increased in price from £6 2s 4d on July 1 to the rate ruling’ to-day, £6 18s 7d. These are sterling prices, and for those countries whose currency has been depreciated in terms thereof the values are correspondingly higher. Tor instance, when the quotation was £6 11s 3d, the Commonwealth Bank’s figure was £8 Is 2d in Australian pounds, with sovereigns quoted at 375. When Britain went off the gold standai’d the commodity was valued at approximately £4 4s lOd, and the question that many people ask is why there should be the fluctuation to present day prices. An Australian contemporary, in discussing this matter, points to gold being- a commodity as a reason why the price moves. The demand for the metal causes the advance, it says. There are people who desire it for hoarding purposes and others for speculation on the probability that gold will once again be the standard of value, and that the standard coin will have a lower gold content than the former gold standard coin. If the gold coinage were restored, it says, and the coins were still described as sovereigns and gold dollai’s, though the gold content were less, holders of gold would have the number of their sovereigns and gold dollars proportionately increased. The writer goes on to show that the “two objects, the desire for safety of wealth, and speculation for increasing the tale of wealth, are the one process—hoarding” —and cites the gold" movements into and out of Bi’itain in May last to show the extent to which the gold is locked up in safe deposits. The excess of imports of gold over exports in that month amounted to £28,255,000 of which not more than half a million “apparently went to the Bank of England.” The effect of the increased prices has been to “bring gold from old hoards to new hoards.” India provides an example. A traditional hoarder of the precious metal, it is estimated that a sum l’ound about £100,000,000 in sterling value of gold has been brought from its hiding place in nearly two years. Anothei’ effect is the gold mining boom with which, so far as this country is concei’ned, New Zealand people are thoroughly acquainted. Spurred by the greater value of gold prospector's are at work in many parts of the country where prospects are favourable and the increased value of exports testifies to the success being won. The fluctuations in value in recent months focus attention on the future of the gold standard. Through the ages gold has been used as a medium of exchange, being always exchangeable and prized. But in recent years, due to political and economic causes, there came about the maldistribution with its serious consequences. Into two countries there flowed about 60 per cent, of the world’s gold stocks, the United States holding about £860,000,000 (gold) and France £660,000,000 (gold). But as the Gold Delegation of the League of Nations stated, if gold is not required to back money in circulation it becomes sterile, and in that state is not useful to the country possessing it. Moreover, depletion of gold reserves disturbs credit systems and that happened in countries which have abandoned the standard. The United States was not compelled to do so, but deliberately chose this course, as a matter of policy. The desideratum is to get this huge quantity of gold to flow to other central banks if the standard is to be ao-ain made workable. Yet, says the Australian contemporary in stressing the confidence gold

gives, without currencies anchored to a commodity which does not deteriorate, which is easily transported, and is readily accepted everywhere for value received—conditions which gold alone fulfills—international exchange will be unstable, and instability of exchange keeps international trade down to a minimum. Above all, instability of exchange places a very hard brake on international investment, and without the investment of savings of developed countries in not fully developed countries we shall be many .years in regaining full prosperity.