GOLD SUPPLY

Dominion, Volume 13, Issue 105, 28 January 1920, Page 7

GOLD SUPPLY

LAST YEAR'S DECREASED OUTPUT

EXCESSIVE ISSUE OF PAPER CURRENCY

INDIA'S INFLUENCE ON THE MARKET (By Telcgraph~rresß Association-Copyright (Rec. January 27, 5.5 p.m.) London, January 22. "Tho Times'" annual financial review for 1919 says-.-As regards gold, last vear will take precedenco of any year since 1813 for eventfulnoss. Among other things, it confirmed the conclusion of leading economists in the nineteenth century that gold, in spite of its limitations, provided tho most suitable basis nf a. sound currency system. Those conclusions have triumphed, in the restoration, after five years, of tho free market in the sale of tho. current output. Permission was granted to Australian producers, in order to prove their contention that they wero receiving less than the market value, and resulted in their disDOsal of 210,000 ounces, at an average of 955. 9d. per standard ounce. Tho tho rise in the paper prico of eold is shown to be the same as in tho Nanoleonic wars, when it readied 110 shillings per standard ounce—namely, the excessivo issue of paper currency in relation to the supply of goods and gold. A tabulated statement shows tho value of the world output last year to have boon X75.000,000,i of which the Transvaal nroduced ,£35,500,000, and the rest of the EuiDire <£U,000,000, as compared respectively with .£38,300,000, and .£20.100.000 in the year 1915. The drop in the world's output last year, as compared with that of 1915, was 22 per cent. Allowing for labour difficulties, and the effects of increased working costs, the exuerienco of the gold industry during war tinio emphasised the danger of attempting to limit the operation of the law of supply and demand. It is minted out that the producers are wisely stimulating the largest possible outout at present, as tho existing high price of gold will not be maintained, consequently the decreased production mav bo regarded as having been checked, and an increase may confidently be anticinated in 1920 miles.? something unforeseen happens., India was an important factor in the 'gold market during tho second half of last year, owing to the favourable trade balance. The Indian Government, recognising it was cheaper to buy geld than silver, in order to meet tho currency demands, prohibited the nrivate importation of gold, in spite of the producers' protests, and' on the basis of tho American exchange and the price nf silver it was enabled to buy sovereigns at about 21s. and resell them in the bazaars at a rate working out at 31s.—Router.