GOLD PROSPECTS.
After referring to the decision of America to devalue the dollar, the writer of the Union Corporation report makes the following observations;
"From the point of view of the Witwatersrand gold mining industry, this is an event of outstanding importance ; for the return of the United States of America to a gold standard with an enhanced price for gold in terms of dollars must have a profound effect on the future price for gold in terms of sterling. In countries where gold is purchased freely the export price for goods and services is mainly determined by two factors : (1) by the price of gold, i.e., by the amount of local currency which can be obtained for a given weight of gold ; and (2) by the price level of goods and services within the country, i.e.' by the amount of local currency required to purchase such goods and services. Now, on the one hand, it is the declared policy both of the countries of the British Empire and of the United &Meg to foster a rise- in the level of internal prices so as to restore as soon as possible a more healthy relationship between prices and costs and between income and debt—and so to open the way for a lasting recovery. On the other hand, each country is reluctant to prejudice its international trade by increasing its export prices as compared with those of other countries.This double objective can only be attained if the sterling and dollar prices for gold are adjusted so as to offset to an appropriate extent any increase in the internal price level, thus keeping the export prices in equilibrium. The United States by its recent action has fixed a minimum rise in the price of gold of 661 per cent. above the old par. Accordingly, the countries of the British Empire, if they are neither to jeopardize their price. raisingprogramme nor to prejudice their international trade, will be bound to adopt—if not the same—at least some similar minimum increase in the price of gold. The recent action of the United States, therefore, may be regarded as an important step towards establishing a minimum sterling price for gold at a level highly satisfactory to the gold mining industry."
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