Evening star., 1936-08-24
IN GOLD
STOCKS MOUNTING
Two Classes of investments
Pointed Out to Probable
Spectators.
BY FRANK J. WILLIAMS.

BY FRANK J. WILLIAMS.
Special Dispatch to The Star.
NEW YORK, August 24.-A wise old
financial editor once adviced cub re-
porter to get the word gold" into the
first line Of his story and it would
surely be read. The very word gold"
has glitter that always appeals to
the eye, stimulates the imagination
and sets in motion q train Of pleasant
dreams.
Gold mining shares probably appeal
to the speculative instincts Of human
beings more than any other type of
security. Hence the periodic boons
such as the one now going on In the
Toronto Mining Exchange. With the
gold output in Canada at . peak for
June, the largest output Of any month
in the history of the Canadian min
ing industry. the turnover in the So
called penny" mining shares on the
Toronto Mining Exchange is exceed
ing the daily business of New York's
great securities exchanges. In one
recent trading session 1851 900 shares
were traded in. the largest total since
April. two years ago. A revival Of
interest in mining shares on the Lon
don Stock Exchange is also reported.
No Amateurs Game.
According to Capt. Barney Jewett,
a Wall Street mining authority, there
can be no legitimate market specula-
ton in new mining stocks. There Is
q speculative opportunity In untried
mines and mining, but this privilege
is the sinecure of those closely allied
with the industry; capitalists who pur-
chase and develop mineral deposits,
and their associates, mining engineers,
mine superintendents. biologists, as
sayers and metallurgists. These are
the people who occupy the points of
strategic advantage In mining specula-
ton. These men are In the know"
and acquire their interest early at a
low figure. They stay with the prop
osition until either it pays out or
peters out.
There Is also a small percentage Of
the public who possess the acumen,
discriminating knowledge and pa
tience for careful research which en-
ables them to pursue such specula-
ton within conservative limits and
with fair measure of success. But
the mass Of the public has no busi-
ness speculating in mining shares.
They are trading on imagination, sec
ond and third-hand information and
blind hope. Capt. Jewett says that
speculative opportunities in gold
mines occur in the initial stages Of
ACKNOWLEDGEMENTS; but these are
known only to those favorably situ-
ated.
The other side of the story is given
by the New York Stock Exchange
firm of E. F. Hutton g. Co. in a re-
cent pamphlet. THE Gold Mining In
dustry."
Advances Spectacular.
Taking into consideration that
there are two classes Of gold mining
shares, those that are nothing but
prospects and those that have a sta
bility and record of earnings over a
period Of years, what this authority
has to say is instructive. 1t points
out that one may well consider the
desirability of gold shares in an in
vestment portfolio because Of the pro-
lection they seem to afford against
decline in the general stock mar
ket. imitation Of the devaluation type.
and contingencies which might arise
in the event Of recession in busi-
ness.
Since 1882 the price advance Of
gold shares has been spectacular, pri-
marily because of advances in the
price of gold from s20.67 to the pres
ent quotation of $35 an ounce. Earn
ings of gold producers have risen
sharply. many to the highest levels
in history. since revaluation. Mining
costs per ounce of gold recovered have
increased somewhat because Of a gen.
eral tendency to mine lower-grade ore
than formerly.
Production Of gold has been stimu-
lated both in this country and
abroad, with imports into the United
States mounting sharply. In 1885
gold output was the largest in history
and registered an increase in ounces
of about IL per cent over that of
1894. Ore reserves have increased
more than rs per cent in tonnage
and about so per cent in gold content
since revaluation. The increase in
workable ore reserves has naturally
extended the apparent life Of the av-
erage gold mine considerably.
6ro1vriuht 1Q26