The Wanganui Chronicle SATURDAY, MAY 19, 1928. THE MOVEMENT OF GOLD

Wanganui Chronicle, Volume LXXXIII, Issue 20150, 19 May 1928, Page 6

The Wanganui Chronicle SATURDAY, MAY 19, 1928. THE MOVEMENT OF GOLD

'pHE RECENT shipment to Australia of gold to the value of £400,000 from New Zealand in a fortnight is an extraordinary episode in the Dominion’s external commerce, as the export of gold has averaged only £555,000 annually in the last seven years, the shipments being distributed fairly evenly throughout each year, including those showing totals above the average. The annual production of gold appears to be used to some extent in adjusting the overseas trading balances, as there are substantial variations in its distribution. Following is a summary for recent years of the destinations of exports of bar, dust, ingot and sheet gold:—

There were also exports valued at £1285 to the United Kingdom and £134 to Canada in 1921, and £65 to the United Kingdom in 1925. Exports of jewellers’ sweepings, concentrates, etc., representing a few thousand pounds annually, are not included in the summary. Exports in 1927 were valued at £534,639; details of their distribution are not available. Presuming the accuracy of the £400,000 figure, it is a reasonable presumption that the recent shipments comprised more than fresh production of gold, and consequently represented the transfer of portion of the gold reserves held by the banks. The cablegram suggests that the operation may represent either an exchange adjustment—that is, in relation to ordinary commerce —or investments in Australian Government securities. In normal circumstances, New Zealand’s adverse trading balance with Australia is adjusted through London, but the financial stringency in Australia may have made a direct adjustment, by a transfer of gold, more advantageous for the banks, especially if they have desired to replenish funds in London, depleted during the period of excessive importation by both Australia and New Zealand, from the proceeds of the Dominion’s heavy exportation in the past 12 months or so. There is no information available regarding purchases of Australian Government securities by New Zealand investors, though there has for some time been an active demand for shares of Australian banks and important industrial concerns, and this has no doubt resulted in the transfer to New Zealand of an unknown quantity of Australian securities. Unless either the vendors or the purchasers of the gold volunteer an explanation, the reasons for the extraordinary movement can be only a matter for speculation. It may be due solely to a domestic adjustment by the banks, to make available in Australia resources that are not. immediately required in New Zealand. A few months ago the Australian banks, which underwrote the Commonwealth conversion loan, had to take up £10,400,000 of the stock, and it was recently reported that public absorption of the banks’ quota—which was offered on the original terms, plus accrued interest—had not been as rapid as was anticipated. Another conversion loan, to meet £21,000,000 of debt maturing on September 15, is looming, so that the shipments of gold from New Zealand may be part of the Australian banks’ efforts to mobilise their resources in preparation for this operation.

Australia. India. U. States. Total. 1921 .. £1,902 — £602,308 £605,629 1922 .. 357 £166,104 354,941 .521,405 1923 .. 35.354 332,238 327,740 695,332 1924 — 323,921 221,067 544,988 1925 .. 381,090 47,301 39,895 468,351 1926 .. 456,337 13,113 44,559 514,009