Gold & Silver

Since the Federal Government began paying $35 an ounce for gold last January, Treasury assay & mint offices at New York, Philadelphia, Denver, San Francisco, New Orleans and Seattle have been doing a bargain-counter business with the general public. People who paid $20.67 an oz. for the gold in their false teeth, loving cups, medals, belt buckles, mesh bags, spoons and watch chains have been cashing in this scrap to make a 75% profit. Last week the Treasury announced that from Jan. 31 to June 22 receipts of scrap gold at the mints and assay offices had exceeded newly mined gold by $7,714,000. Total value of scrap was $57,485,744.

Beside this yellow river a white one ran into the Treasury as the Government continued to buy silver bullion under the Silver Purchase Act. Total purchases since May were up to approximately 70,000,000 oz. "Silver traders on the New York Commodity Exchange were greatly perturbed last fortnight when President Roosevelt signed the bill, which places a 50% tax on all profits from speculation in silver bullion, exclusive of industrial hedging and hedging by banks against foreign exchange. By law the Treasury is not allowed to pay more than 50-c- per oz. for silver stocks held in the U. S. on May 1, though it may pay higher prices for silver abroad or for silver acquired by U. S. traders since May 1. Three days before the bill was signed, trading in silver on the Commodity Exchange fell to 125,000 oz. against an all-time high of 18,950,000 oz. on Nov. 9, 1933. A report was published and immediately denied by the Commodity Exchange that silver futures trading would stop altogether. Traders next thought they could ship their silver abroad, hold it for a better price. After large mysterious consignments from Shanghai "to Vancouver and return" and "to London or Bombay" were discovered Secretary of the Treasury Morgenthau, on President Roosevelt's order, closed up this loophole last week by slapping an embargo on silver exports similar to the gold embargo of April 1933 (TIME, May 1, 1933). Legitimate silver exports to fulfill prior obligations and for certain regular trade purposes were made 'subject to license. Meantime trading on the Commodity Exchange was active at about 5,000,000 oz. per day, partly because of Government buying, partly because of the disgruntlement of speculators closing out their silver accounts. Short sales were few.

To carry out the prime purpose of the Silver Purchases Act, which is to convert 25% of U. . S. monetary reserves into silver, the Treasury will have to buy 1,254,000,000 oz. of silver--about one tenth of the world's supply. Secretary Morgenthau has announced that he will "enthusiastically" carry out the purpose of the Act--but no time limit for its execution is set. Against silver purchases the Government at present will issue certificates equal to the price paid for the metal. For its purchases so far the Federal Government has paid an average of 44-c- per oz.--the open U. S. market price. Federal officials predicted last week that before the buying is completed the Treasury will have to pay an average of 75-c- per oz. If that forecast proves correct, the Treasury will be obliged to issue $940,000,000 in the form of new silver certificates.

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