ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Banks-Year-End Enlgma

of gold produced during the year. Upto the end of October in 1871, the Fund sold $378 inn worth of gold for currency, and bought gold worth $ 137,6 mn, In addition to sales of gold to purchase currencies, the Fund has also sold gold worth $400nm to the US, for acquiring income-earning US treasury bills and short-term notes. The holdings of gold by central banks and governments has shown a steady but slow decline since the middle of 1970. The figure retreated from $ 39,140 mn in April 1970 to $ 38,480 mn at the end oi the second quarter in 1971. (These figures arc expressed in US dollars at $35 per fine ounce. The change to $38 should represent a major increase in the liquidity position of Members, but of course that is the nub.) Speculative sales during the last three years have averaged about 200 tonnes per year. This source was responsible for bridging the gap between new production and total demand. Production of new gold in 1970 was L295 tonnes, while demand for fabrication, etc, is between 1,300 and 1,400 tonnes. About 200 tonnes are believed to have gone into long-term hoarding. Thus it is seen that sales of speculative gold must have been of the order of 400 tonnes last year, since all new gold was not sold in the year of production by South Africa. It is also evident that speculative stocks must be running very low by now, and cannot materially affect the market for some time.

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