Gold

Gold Consumption.

Though the uses of gold in the arts and industry requires a material percentage of the current output, this has declined sharply in recent years. Data on the subject are in complete, but so far as they can be traced, the highest industrial consumption since the World War was 7,545,000 oz. in 1922; since this coincided with the low point in production, in 1922 industrial consumption was equivalent to 48.8% of world output of new gold. There then followed an almost unbroken decline to a low of 1,725,00o oz. in 1932, equivalent to only 7.1% of current new production. The average since 1932 has been about 6.3%. For merly India was a heavy importer of gold, much of which went into jewellery and private hoardings, but in recent years India has been exporting heavily, and the estimated private holdings in the country have been reduced by about 16%. The same has been true, but to a lesser extent, in China and Egypt.

Open circulation of gold coinage having been debarred in nearly all countries, the remainder is held in the public treasuries as backing for currency in circulation. The total amount thus ac counted for at the end of 1937 was approximately 750,000,000 oz., or 57-8% of the total output since 1493. The accompanying table gives the distribution of the aggregate world output since as estimated for the end of the years 1913, 1926, and 1937.

Distribution of Aggregate World Gold Production (Millions of fine ounces) World Ore Reserves.—To arrive at an estimate of the world ore reserves requires an extensive knowledge of the character, extent, and richness of each individual deposit of importance, as well as working conditions, cost of operation, and, most important of all, the price to be realized for the product. On none of these are the data available sufficient to enable one to venture an estimate that would have any real meaning, especially so long as price re mains a variable. Probably more is known about the Rand area of South Africa than of any other important deposit in the world, and this will serve as a good example of the difficulties to be en countered in making such estimates. Early estimates of the total production to be expected from the Rand started at 76,000,000 oz., and as time passed, increased to 188,000,000 oz. ; yet total production to the end of 1927 had amounted to 211,000,000 oz., and at that time reserves were estimated at 118,000,00o ounces. However, from 1928 to 1938 Rand production totalled a further 125,000,000 oz., output had increased from 990,000 oz. to 000 oz. and was still rising, and the operating companies had an average five years' supply of ore blocked out, with large potential reserves still in the background.

For the past 25 years it has been forecast that the Rand would soon pass its high point and start to decline, but this has not yet come to pass, due to the discovery of new productive areas, to improvements in technology resulting in increased recoveries and reduced operating costs, and, most of all, to the rising price for gold that has prevailed since 1931. It is estimated that this last item alone will add something like i oo,000,000 oz. to the potential reserves of the district, as it has made possible the re duction of the average grade of ore treated from 6.5 dwt. per ton in 1929 to 4.3 dwt. in 1939, with still further decrease in prospect.

The difficulty of predicting in advance the combined effect of all of the factors involved, and making an estimate of future output may be illustrated by citing various past attempts. An estimate made in 1914 predicted a Rand output of 2,600,000 oz. for 1938; in 1925 this was raised to 3,750,00o oz., in 1927 to 6,000,000 OZ., and a year or two later to 6,700,000 oz., while the actual output eventually attained in that year was 11,193,000 ounces. An esti mate of world output made at the same time as the last Rand estimate cited above predicted a world total of 20,000,000 oz. in 1930, with a subsequent reduction to 17,650,000 oz. by 1940; actual output in 1930 surpassed the estimate by only 4%, but that predicted for 1940 had already been doubled by 1937, with the output still rising at a rate which, if continued, will give for 194o an output of about 40,000,000 ounces.

Conditions then being as they are, it is impossible to set even an approximate figure for either world ore reserves or for future world output ; the most that can be said is that so long as there is maintained a policy of increasing the price of gold to meet rising costs of operation, the world output will continue to increase. Proper adjustment of the price level can be made to yield any out put desired, within reasonable limits, so that by concerted action between the leading buying nations, output can be made to increase or decrease, to fit the demand at the time. However, already the question is being raised in some quarters as to what may happen if and when the world reaches a point where it is felt that gold is no longer generally acceptable as a dependable standard of value, and its price comes to be based mainly on its demand as a commodity for industrial consumption; this is the position in which silver has been placed for a long time (except for recent years in the United States), and whether it may also be impend ing for gold is one of the leading questions of the near future.

(G. A. Ro.)