Courtesy Reuters

Trends in Gold Production and Monetary Stocks

DURING recent years there has been little more than a spasmodic relationship between gold and most of the world's currencies. Yet despite the depression and the vagaries of monetary policies, the position of gold has remained unchanged in one respect -- there has been an unlimited willingness to accept it everywhere. No tariffs or quotas restrict its flow in the settlement of international balances. Labor spent on producing gold in Russia buys more machinery than the same labor devoted to wheat production. Colombia can buy airplanes with gold better than with coffee. This universal usefulness of gold implies that its position is due not only to its monetary use but to its economic character apart from legislation. Governments, private corporations and individuals everywhere have therefore found gold mining an attractive enterprise regardless of prevailing monetary theory.

The following table, compiled by the American Bureau of Metal Statistics, shows the trend in the world's gold production since the World War:

Fine Ounces Change from Preceding Year Index
(in thousands) (in percent) (1925-29=100)
1913 22,929
1920 16,126
1921 15,984 - 0.9
1922 15,445 - 3.4
1923 17,786 +15.2
1924 19,050 + 7.1
1925 19,031 - 0.1 98.0
1926 19,369 + 1.8 99.7
1927 19,446 + 0.4 100.1
1928 19,583 + 0.7 100.8
1929 19,673 + 0.5 101.3
1930 20,722 + 5.3 106.7
1931 22,371 + 8.0 115.2
1932 24,306 + 8.6 125.2
1933 25,503 + 4.9 131.3
1934 27,630 + 8.3 142.3
1935 30,660 +11.0 157.9

We see that from the low point in 1922, world gold production had increased by 1935 almost 100 percent. The 1935 figure is 58 percent greater than the average for the years 1925-1929. The average annual rate of increase in the past six years has been about 7.7 percent.

These figures offer an interesting contrast to those used in the discussions of several years ago about an impending gold shortage. Undismayed by the well-established fatuity of forecasting shortages, the Gold Delegation of the Financial Committee of the League of Nations issued an Interim Report on September 8, 1930, setting forth its estimates of the future production of gold. The Delegation presented two estimates: one a summary of official or semi-official calculations of probable production in the various countries, the other a revised estimate by the late Mr. Joseph Kitchin. Mr. Kitchin's estimates run consistently higher than the Gold Delegation totals. The actual figures for 1935 exceed Mr. Kitchin's expectation by nearly 60 percent. Production in 1930, the very year during which the estimates were compiled, exceeded the estimates for that year by over 6

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