Gilpin observer., 1920-01-29
BANKERS EXPLAIN
HIGH SILVER PRICE
Knauth, Nachod & Kuhne, of New
York, Say the White Metal is
Bearing Burden of GOld-Pr0-
ductiOn Falls Off.

The high price of silver is at
tributable partly to the increased
burden which has been placed up
on the gold supply of the world
and also to decrease in emer-
gency production of gold, accord
ing to Knauth, Nachod & Kuhne,
bankers.
In discussing the situation the
banking house says:
Among the phenomena of soar
ing prices, which have followed
one another in bewildering sue
cession these last few years, there
is probably none fraught with
greater economic significance
than that in the market for silver.
within the last few days the
white metal has sold in New York
at $1.39 an ounce, the highest
price on record, comparing with
an average price of 5S.17 cents
for the fifteen years prior to the
war. The demand for it, morrow
er, shows every evidence of con-
tinuing, and predictions are being
made that it's price tendency will
be upward for a long time to
come. At 1924 an ounce, it
reached the point where its bull
ion value exceeded its value in
coin.
"The fact is that the produc-
tive vitality of the world, now in
such urgent need of being in
creased on scale never before
attempted, has come to be depend
ent upon this metal to an extent
beyond the dreams of even the
most ardent of silver's political
partisans.
Underlying this remarkable
situation are two commanding
causes.
First is the position of gold.
AS everybody knows, it is main
ly to that metal that the modern
world has looked to perform for
productive enterprise the requis-
ite functions of facilitating ex-
change, furnishing the basis of
the credit system and imparting
liquid form to capital.
But compared to the almost in
conceivable burdens which gold
has been called upon to carry
since 1914, it's supply is lament
ably deficient. Estimates for 1918.
the latest year for which figures
are available, place the total
world stocks of the metal, eXclus-
i've of those of India and Egypt, at
about $9,6OO,OOO,OOO. Against
this, it is estimated that during
the war, the worlds bank depos-
it's increased $25, 5,OOO,OOO,OO0 and
note circulation $100,000,000,O00.
From which it becomes apparent
why the great central banks and
treasures have been so eager to
gather into their vaults every ves-
tige of the gold supply available,
leaving a scant Is per cent in gen.
eral circulation, or less than half
the requirements of normal times I;
and why authorities hold the opin-
ion that the metal will probably
not for years to come be allowed
to circulate freely for internal
purposes, especially in European
countries.
"In the face of this basic need
for gold, so rapidly growing in
urgency, production has been fall
ing off. In 1915, for example, it
was $470,329, ,527; in 1918 only
1884, ,576,700. Preliminary esti-
mates indicate even smaller world
production for 1919. Nor can this
situation easily be corrected. With
the price of gold definitely fixed
in accordance with the monetary
standard, there is left little mar
gin for stimulating production by
offsetting increased costs.
Therefore, silver, which next
to gold is the most universally ac-
cepted form of money, has come
to the. front to bolster up the in
fated currency and otherwise
watered capital of the world, and
to meet the necessity for largely
increased circulating medium of
exchange.
added to these demands are
those rising out o the abnormally
large trade balances which India.
China, and practically all of the
other Eeastern countries where
silver is in special favor, have
been piling up against the rest of
the world. In these countries
A