SOVIET GOLD

Poverty Bay Herald, Volume LXIV, Issue 19377, 15 July 1937, Page 9

SOVIET GOLD

REVISION OF OUTPUT BIG INCREASE REPORTED FACTOR IN RECENT SCARE A factor which served to emphasise the renewed gold scare in London early last month, caused by the resumption of the gold flow from Soviet Russia, was the publication simultaneously of a report that the Soviet 193 G output was much larger than previously announced. According to the Far Eastern Survey of the Institute of Pacific Relations, Russian official quarters now place the 193(1 gold output at 10,G00,0000z., against the original estimate of 7,350,0000 z. accepted by the Bank of International Settlements and other authorities. If the higher figure is correct, Russian production is almost equal to that of South Africa, the highest producing country of the world with an output last year of 11,300,0000 z. In value the Russian output represents £75,000,000 sterling in place of the original, estimate of '£50,000,000 sterling. Although bullion market circles were inclined to be sceptical of the report, increasing shipments of Russian gold quickly led to a flood of selling on the London market of offerings from private hoarders, who are estimated to hold to-day upward of £150,000,000 of gold in London vaults. So great was the distrust that the price would not be reduced that daily sales at the fixed price rose rapidly from £342,000 on May 27 until £4,200,000 worth was sold on June 4. Commenting upon the nervous state of the market the Financial News stated that in face of the determination of the Soviet authorities to procure exchange by means of exporting gold irrespective of cost of production, neither a rise of commodity prices nor a reduction in the price of gold would provide a solution. The only way to solve the problem was to induce the Soviet Government to agree to a limitation of gold exports. After all, the fear of a reduction in the price or of a limitation of gold purchases must have been at least partly responsible for the acceleration of the pace at which the Soviet Union was producing and exporting gold. Once the fear was removed, it would be easier to reach an agreement.