DRAIN OF GOLD

Evening Post, Volume CXXVII, Issue 1, 3 January 1939, Page 12

DRAIN OF GOLD

POSITION EXAMINED

PRESSURE ON STERLING

(By Telegraph—Press Association —Copyright.) (Received January 3, 10" a.mi) LONDON, January 2. The persistent repatriation of funds to France and the Continental demand for United States dollars, owing to fears of international trouble, have caused sterling to weaken, but the business reported is not large. The Exchange Equalisation Control has operated in the direction of halting the decline of the pound. A rough measure of tne extent of the pressure on sterling and the drain of gold during the September crisis is revealed by the official disclose that the Exchange Equalisation Account's gold holding at September 30 was £151,000,000 at a gold price of 140s a fine ounce, compared with £298,000,----000 at March 31. This confirms the market estimates of the effect of Continental owners' transfer of "hot money" to New York in August and September. There has been a further loss of gold since then caused by the recent repatriation due to international uncertainties, probably to the extent of £ 50,000,000. However, the net gold exports since September 30 are £78,----500,000, while the authorities have in- . termittently bought gold from hoarders and also acquired probably, £15,000,000 of newly-mined South African gold. Accordingly it is estimated that the Exchange Account /holds appreciably 7 above £100,000,000 of gold. • The real defences of sterling are centred in the Bank of England's gold, ■ which is still, roughly, £538,000,000, as at March 31 and September 30. It thus is believed that the gold reserve 'is adequate for afiy unforeseeable circumstances, except a major war. Moreover, its value is 1 increasable by £50,----000,000 at the current gold price of nearly 150s a fine ounce.