The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1902-09-25
BUYING COLD IN loNpon.

The announcement. the other day. that
s., .5f 200 in gold was sold IN the open
market in London, supposed to be chiefly
Tor export TO tie United States. has re-
newed the inquiry as 70 how these trans
actions are made. who buys and sells. and
where the floating supply Is kept. says
the New York Evening Post The
term open market" as used in Europe.
Is really a technical expression under
prevailing practices. and il pertains 10 all
private transactions in gold. as distin-
guishcd from purchases from the Bank
OF England or other government banks
Oh the continent Most Of the gold en-
gagged for shipment 10 America. including
that from Australia and South Africa.
vas negotiated for in the open market IN
London.
The cost OF carrying gold as an in
vestment. said a well-known foreign ex-
change expert today purely as com
modify is so great. and interest on the
investment runs up 50 rapidly, that no
body in London. Paris. or Berlin thinks OF
doing SO as an ordinary business propo-
sition- Consequently. the moment any
new gold arrives as bullion from South
Africa. Australia. or elsewhere. in LOc-
don, il is hurried TO the reIners OF the
Bank OF England and promptly assayed-
Unless somebody IN the meantime inter
cepts il. Il viii Immediately be turned into
the Bank at rs. Sd. per ounce the
standing price which is paid for the yell
low metal. II the original owner or any
body else. FOR that matter, desires 10
buy back the gold after the refining pro
cess. with the Bank stamp upon II. he
is charged rs. 19d-. the advancement Of
Id. in price representing. in addition 10 the
cost OF refining. the loss Of interest which
is borne by the Bank.
Now, q careful watch IS kept on the
output Of all OF the producing mines in
the world whose gold is likely 10 be ship
ped 10 London. Paris. or Berlin, and on
the bankers or other interests TO whom
the new metal is consigned. The moment
q shipment is made from a Witwaters-
rand mine. FOR instance by a certain
steamship. it is known in London. and
frequently lively bidding for IL begins a
fortnight or more before il is due 10 ar
rive That IS what is called the open
market II may change hands two or
three times. while on the water. but as
a rule. when it arrives it is out Of the
market and its destination is definitely
settled. II is a common thing when this
new gold is engaged Tor export 10 New
York or elsewhere 10 buy other gold for
immediate shipment TO replace what is
due to arrive. say from South Africa. 50
as 10 lose no time in making connec-
tons by q certain vessel. II the remitter
waited for the African gold he might lose
four or five days interest in transship-
ment. He therefore makes a temporary
purchase. say from the Bank Of England.
OF perhaps arranges to borrow some from
a private bank. and when his importation
arrives he restores what he bought or
borrowed Professionally.
There is no such thing as bankers or
brokers who keep any considerable supply
o. gold bullion for large commercial
transactions; hence there is no floating
supply, and the term open market is
purely technical one Under the pres
ent methods Of dealing in bullion, the loss
OF interest is virtually reduced 10 the time
required in the shipment. Exchange bro
kers figure out 10 the smallest fraction
ali Of the various detailed expenses. such
as insurance. transportation. handling and
allowance for abrasion. and a small diff
ference in price is sufficient to divert a
consignment from the original owners TO
any one of a number OF bidders The rea-
son why the banking interests who CON
troll much Of the Australian gold coin
shose 10 let the yellow metal go TO San
Francisco instead of to London. where
/. was really owned. was because
slightly higher price was offered for fl
than the Bank Of England would pay.
with the freight charges for shipment in
Guided As the Bank of England would
pay only rs. Cd for the gold delivered.
the net selling price would be that figure
less the cost of shipment. which would
be about L per cent. and insurance OF =
per cent. As some concessions were prob
ably made in the shipping rate 10 san
Francisco, the gold was easily diverted
Probably all Of this Australian gold was
negotiated for in the open market in Lon
don. So was that coming from South At
RIGA and destined for New York
y curious feature Of the gold market
which indicates that II is dealt In just
like any other commodity. was well illus
trated by the methods which are reported
u have been adopted in picking up the
yellow metal in the Lon0on market for
America. in order to buy the gold az
cheaply as possible. and 10 cover all Of
the expenses without loss as an exchange
transaction. which is the aim Of all bank
ers engaged in these operations. attempts
We're made 20 depress the price Of gold
by so-called wash" sales Of small guam
titles at price of. say. I'd. OF sd below
the prevailing one. In exchange circles /
an unconfirmed report was current that
the National City Bank disposed OF S25a-
c0o of the first South African gold which
il bought at concession Of sd. or I'D
This apparently induced the c0nsignees Of /
Sc me large amounts Of foreign gold % sen
at the same price, or a slightly higher
rate and il is believed the National City
Bank thereby secured most of the engage /
ments at us. sgd. or less. The rate pre-
vailing for some time had been US 9izd T
At the same time. il IS believed the ex- I
change market has also been depressed 4
by speculative sales. so as 70 permit Of T
the purchase IF sight bills IT q level % I
cover the purchases Of gold at a slight F.
profit. or without loss