Hunt for Gold

Gold-mining shares were eagerly bought on the world's stock exchanges last week. In London, trading was the heaviest in 3 1/2 years, and prices climbed to the highest in nine months. Canada had a flurry in low-priced gold shares. In Wall Street, where gold shares have steadily climbed in the past year, Investment Bankers Dillon, Read let out that they are forming an investment trust ($30 million to start) to buy South African gold shares, thus adding another fillip to the London buying.

Part of the investors' interest could be attributed to gold's traditional role as a hedge against recession. While many other industries struggle to sell their product, the U.S. Government buys all domestic gold output; thus as mining costs decline (at least theoretically) and the selling price remains the same, gold-mine profits should rise.

But a much bigger reason for the new interest was continued gossip that the U.S. will soon raise the price of gold from $35 an ounce, where it has stayed since 1934, to $40. Such an action, went the talk, would not only ease the profit squeeze on many of the world's mining companies, but would also stimulate foreign trade by increasing the foreign-exchange reserves of many U.S. friends and allies.

Actually, the U.S. Government has no thought of boosting the price. Reason: it would probably do more harm than good abroad. Canada, South Africa and Russia, which has a huge stockpile, would be helped. But for dozens of other nations, which owe the U.S. money, it would only mean further depletion of their already skimpy foreign reserves.

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