Evening star., 1925-02-01
EXPORTS OF GOLD
Absorbing TOPIC
Enormous Shipments Abroad
Have Not Yet Caused High
er Money Rates.
BY GEORGE II. HUGHES.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, January 31.-The
steady increase in gold export has
been the absorbing topic in invest
ment circles this week, the inference
being that the outflow of yellow
metal would ultimately raise money
rates and so affect security prices.
This is so fundamental that 1t de-
serves careful consideration. On the
face of the statistics it does look as
though the tide had definitely turned
If the outflow Were to continue at
the January rate it would amount to
around a billion a year, which, of
course. is q very large sum, even in
comparison with Americas present
bnormal supply. Since December j
the total amount exported has run
over S125,000,0O0 The principal i'm
porting countries have been Germany,
Australia. England and British India.
Gold From Other Sources.
Examination of the Federal Re-
serve weekly bank statements shows
the effect of this drain, but it also
shows that some of the gold is
coming from sources other than the
reserve banks. Total gold holdings
for the system were at their low for
1924 on December "a and the amount
was $2.912, 600. Doubtless holi-
day demands were responsible, in
part at least. for the losses reported
just before Christmas, but, even so,
the present supply has been but little
diminished by the export movement.
The record high was established on
July %, 1924, when total gold of all
the Federal Reserve Banks was
$3.167, ,527 900, which Is only $22s,141,-
900 above this weeks S total. In other
words, the gold export movement can
go on a long time before any con-
Germ need be felt as to the effect
upon money rates, provided there is
no sudden and abnormal increase in
the demand for commercial purposes,
Of which there is at present no sign.
No stifening Yet.
At any rate, there has been no
stiffening in money this week nor
has there been any weakening in
the quotations for high grade invest
ment bonds Prices for securities OF
the first grade have varied only frac-
tionally. On the other hand, there
has been steady inquiry for bonds
just below the gilt-edge class and
the spread in price between the two
grades noticeably narrowed. In fact,
the buying of these second grade
railroad bonds has been more impress
sive this week than at any time in
the past six months. Quotations
have crept up so gradually that II Is
only by comparison of prices over a
period of weeks that the change is
noticed This is exactly what always
happens when investors have finally
become convinced that even if a sec
ond- grade bond is not quite so Sc
cure, that factor is more than com
pensated for by the higher yield and
the improved business outlook.
Turn to Preferred Issues.
Another development which has
served to renew interest in the bond
market has been the slowing down
of speculation in stocks. Buyers who
look to income rather than to CAPT
tai appreciation are forced TO turn
from common stocks to preferred is
sues or TO bonds, simply because the
rise of stocks has carried the quo
tation up so far that the yield is no
longer above what may be obtained
on senior securities Of the same
rating.
The week has been marked by the
offer of a number of new foreign in
dustrial issues Most of these have
gone readily. 1t is a little remark
able how easily these foreign secur-
tiles have been taken, considering
all the discussion in the newspapers
about the interallied debts.
Copyright, 1925.)