DEALERS IN GOLD

Hokitika Guardian, 13 June 1931, Page 6

DEALERS IN GOLD

ROMANCE OF BULLION MARKET. ‘•'[’lie bullion market is one of flic most romantic of London’s institutions. Leery year many million pounds’ worth of solid gold are sold there like so much merchandise.” says a correspondent of the “Spectator.” “The annual output of gold from the mines of the world during recent years has ranged from .£80.(HXh()0 to- LSS,O(X>,()()(>, and about three-quarters of this is produced in the British Empire. By far the largest producer is South Africa, whose output last year was about £4.5,000,000 and of this rather more than £36.000,000 was sent to London .or sale. There are two channels through which gold can be bought and sold — the Bank of England and the bullion brokers. The bank is obliged by law to buy the gold offered to it at a fixed price of 77/0 per standard ounce, and sell if in unlimited quantities at 77/10 r per standard ounce. The South African gold, however, is dealt, with by the bullion brokers. Shipments of this gold arrive by mail steamer every Monday with almost clock-like regularity and these are sold in the bullion market on the Tuesday. The bullion brokers who,by the way, are a small and very exclusive circle, arrive with their orders, and the price of gold fetches depends like that of an other commodity, on supply and demand. The fluctuations, however, are necessarily small. The buyers of gold in the markets are of two classes. There is the trade, that is, those who want gold for commercial use in industry, and foreign banks who are desirous of increasing their, gold reserves. The amount of gold bought by foreign banks depends largely on the rate of exchange at which sterling stands. If the rate is low and the foreigner can buy his pounds cheaply, gold is more likely to be bought. Any gold remaining unsold in the. market is sent to the Bank o England, which is bound to buy it.