STERLING AND GOLD
The defence of sterling in the foreign exchange market has been no less praiseworthy than the performance of the Stock Exchange. Whatever views of the " real value " of the pound might have been held in high places a fortnight ago when there was a whispering campaign for a downward revision against the dollar, the time for taking out the peg has obviously passed and the control has taken the proper course in defending the pound around the recently-adopted level of 4.688. What the cost has been it is impossible to gauge since the published figures of gold exports include a good deal of metal dispatched to Canada and New York as part of a deliberate policy of building up a British gold reserve in those centres. One imagines, however, that a daily average loss of £5,000,000—which is considerably below the figures reached in the September crisis last year— is not far from the mark.
Fortunately, the Exchange Equalisation Account has ample gold resources at its disposal so that there should be no question in present conditions, when speculative dealings have been so drastically reduced, of its ability to hold sterling at the chosen rate. As in previous crises gold has attracted the attention of Continental hoarders, but a new development has been the sudden emergence of. the Indian demand for silver on a large scale. In India, it seems, there is still a lively recollection of the big rise in silver which took place between 1914 and 1918 ; hence the demand for that metal as a war hedge. The extent of this demand has astonished London bullion brokers and has already lifted silver prices 214. above the low points touched last month.
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