GOLD PRICE

New Zealand Herald, Volume LXXIV, Issue 22700, 12 April 1937, Page 9

GOLD PRICE

STIR IN MARKETS . POLICY REDUCTION DENIED CHAOS IN LONDON SHARES DEPEECIATE By Telegraph—Press Association—Copyright (Received April 11, 5.5 p.m.) : LONDON, April 10

A message from Washington yesterday stated that President Roosevelt denied that the United States Treasury had made any plans to lower the price per ounce below 35 dollars. He insisted that the reports that such a move was intended originated in the foreign press on Wednesday.

"As bad as the war," was one London broker's description of the market chaos which culminated today in frantic dealings in the street as "bears" scrambled for cover following Mr. Roosevelt's denial that he intended to reduce the gold price.

The violence of the market fluctuations is illustrated by the fact that West Witwatersrands, offered as low as £]3 10s yesterday recovered on the street to-dav to £ls 2s 6d, compared with £l7 12s 6d a week ago. Rumours have been very costly. At one time the market value of a wide range of shares must have depreciated by tens of millions of pounds, and not only speculators but serious investors whose nerves were unequal to the strain were involved, in heavy-losses. Monday Panic Probably Averted There has been bitter criticism in the City of .the American methods, yet it is admitted that Mr. Roosevelt has achieved one 6f his main purposes with remarkable ,economy and energy, namely, to damp down speculation. A leading .financial authority remarked to a representative of the Australian Associated Press: "Mr. Roosevelt uses a mouse to-do the work of an elephant. He whispers ''down' and the markets blindly follow without considering whether he lias the power to enforce his wishes." , The Financial Times says it considers , that while the ' President's statement has not wholly undone the damage to the world's markets it has probably' saved a panic on Monday. The outlook now is much brighter and good gold shares should gradually recover, although the long-term outlook is no longer clear. The marke£ should enjoy a respite from exchange fluctuations with the franc destined to settle down around 112. Commodity movements should also - be less wild. in Bullion Market The markets' chief anxiety for weeks to come will be to avoid being caught with the wrong foot off the ground. The nervousness in the bullion market has by no means been completely allayed. The exceptionally large amount of £14,2Q0,00Q, worth was sold this morning at a discount of threepence on the American parity, an indication of the nervousness of holders.

The ,Citv editor of the Times says he considers Mr. Roosevelt's declaration should suffice to reassure the markets that an important change in America's gold policy is not contemplated. The Sugar Conference fixed the free market at 3,170.000 tons and hard bargaining .in quotas is inevitable, the realisation of which combined with Paris selling led to the price declining Cotton resisted the panic, indicating that the statistical position is stronger. It is generally believed that consumption is good. The outlook appears to be moderately favourable. WEAKNESS OF FRANC MINISTER'S REASSURANCE NEAR PANIC, IN GOLD SHARES (Received April 11, 5.5 p.m.) LONDON, April 10 Francs were' freely offered yesterday at 109 i. A story was current in the City that the franc would be devalued at 112 and that simultaneously President Roosevelt would raise the value of the dollar to the legal maximtrm by modestly cutting the gold price to 34.35 dollars per fine ounce. This would make possible a return to the oid sterling parity of 4.86 dollars. The equivalent-' London price of gold Would then be around £7 Is. The liquidation of gold shares yesterday almost assumed panic proportions. The largest falls were sustained by companies at present in the development stage. Other markets were dull. The selling of Kaffirs was resumed yesterday afternoon in spite of occasional buying 'by bargain hunters, and they closed at the lowest levels of the day. The franc also weakened in the afternoon. A message from Paris stated that the Finance Minister, M. Auriol, conferred --with the Exchange Equalisation Committee, after which be denied reports that France would allow the franc to fall beiow the legal limit of 111. Healso denied .that a modification of the three-Power agreement was imminent. M. Auriol declared that there was no reason for disquiet owing to exchange fluctuations, as in this regard the controllers of the equalisation fund would take appropriate measures.