THE CASE FOR GOLD SHARES
The case for holding proved gold-mining shares is so good that it is a pity to adorn it, as Throgmorton Street is so fond of doing, with fanciful pictures of gold rising to £8 or even an ounce. Assuming that the investor has selected his purchase among the proved producers, such as Crowns, Brakpans or West Springs, and has satisfied himself that the yield, after making allowances for amortisation—a gold mine is a wasting asset—is, say, anything between 51 and 61 per cent., what is the attraction of this type of holding ? As I see it, the merits of a good gold share holding in current conditions are, first, that the yield basis is reasonable ; second, that the price of the commodity in question is not likely to depreciate ; and, third, that any rise in costs will almost certainly be moderate in extent and very gradual.
Those seem to me to be quite satisfying reasons why gold hares are worth having and, if one must discuss the probable fluctuations of the price of gold in the future, I am on the side of those who think that a further rise in terms of Paper money is more likely than a fall. That is not to say, however, that I am looking for any early movement in this direction, which, so far as I can judge, could only result from a fresh devaluation of the American dollar. As an investor, as distinct from a speculator in gold shares, I should be content for the present to rest on the assumption that the (Continued on page 780
FINANCE AND INVESTMENT
(Continued front page 779) current level of roughly £7 an owner is more likely to prove a minimum than a maximum whenever international stabili- sation again becomes practical currency politics.
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