THE FIRMNESS OF GILT - EDGED
There is an old saying on the Stock Exchange : In critical times, watch gilt-edged. The theory is that the approach af any really serious shock to confidence is invariably heralded by a break in the gilt-edged market, presumably because this is the market par excellence which is subject to the influence af well-informed buying and selling. Up to a point this is sound reasoning, but I doubt whether it is as trustworthy as it was. The behaviour of gilt-edged is affected nowadays by so many currents of buying and selling and the psychology of the average investor has changed so strikingly in recent years that it seems to me to be possible for major developments to take place without producing more than the merest tremor of the gilt-edged needle.
The huge funds at the disposal of various Government departments, the large proportion of banking resources now employed in gilt-edged, the attractiveness of British Govern- ment securities as a refuge for roving balances from abroad are all new influences making for comparative stability even in troubled times. Reinforcing them is the amazing stolidity of the home investor who has now grown so accustomed to daily " incidents " and shocks that he refuses to be panicked into selling gilt-edged and accepting the insignificant return offered on a deposit with the bank. It may still be true that events culminating in a major international conflict would cast their shadows on gilt-edged prices, on which assumption one may be thankful that War Loan preserves a firm front with its head still over par.
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