The Press 'Verwoerd warns on Gold' ran the main head-
line in last Tuesday's Daily Express : 'South Africa has issued a grim warning.to Britain on the havoc that would hit world gold markets. in- cluding London, if trade sanctions are imposed on Dr Verwoerd's Government.' Indeed, we were told, the South Africans, acting no doubt on the Bellman's principle, regard the situation as so serious 'that the warning has been sent THREE TIMES to Mr Harold Wilson and his policy- makers.' Flanking an interview between its old white Commonwealth stalwart Mr Rene MacColl and a leading South African gold expert who hinted darkly that if South African gold were declared black it would find a ready market in the Vatican, the Express displayed yet another telling quotation from yet another South African gold expert, this one concluding menacingly, `And if you cut off the flow of South African gold what would happen to Britain's gold re- serves?'
Well, the short answer is 'virtually nothing: South Africa's gold is sold to buy foreign ex- change to pay for the Republic's imports: it doesn't go into Britain's reserves at all. And since the price of gold is fixed by the Americans, any 'havoc' that might hit world gold markets if South African sales were to be diverted to the Vatican or the brothers Vardineyannis would be of a strictly limited nature. Paradoxically, the only real 'danger' would arise if the boycott were, per impossibile, totally effective; in which case the artificial shortage could lead to such a run on the metal that the Americans would be forced to increase the price. This would, I believe, in the long run be a good thing; but since South Africa would be a major beneficiary it would appear a strange form of sanction.
Of course, it's perfectly true that a trade boy- cott of South Africa, our third biggest export market, would be the most foolishly expensive political gesture imaginable, gratuitously crip- pling Britain's balance of payments to no likely effect. But the one thing we don't have to worry about is the 'loss' of South African gold.
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