FINANCE AND INVESTMENT
ONCE again it is gilt-edged first and the rest nowhere in Throgmorton Street. The gilt-edged market is, of course, just bristling with bull points. Lombard Street is basking in almost unprecedented monetary ease created—who can doubt it ?—by deliberate expansion of credit ; French money now in London is not likely to re-cross the Channel on any large scale in present political conditions ; nor can one imagine any big and sustained speculative movement in stock markets either here or in Wall Street in the near future which would entice funds away from gilt-edged stocks. So with these positive and negative factors all working in their favour, fixed-interest securities as a group seem to be sitting pretty. Investors may draw two conclusions, first, that they are running little risk in buying gilt-edged and other well- secured fixed-interest stocks and cannot hope to gain very much by delaying intended purchases ; and second, that the chances of quick rises in speculative shares are still rather thin.
Should I couple gold with gilts, as is now the fashion in investment, or must one oppose such an " unholy alliance " ? My own view is that gold shares, by which I mean the shares of the well-proved mines with a long life in front of them, are a useful leaven in any investment portfolio. Yields between 6 and 8 per cent., after providing for amortisation, can be obtained which help to sweeten the average yield on a well-spread list of investments. But, to reverse the old adage, all is not gilt-edged that is gold, and even the best mines may strike occasional bad patches. Otherwise, I might add, the yield would not be 7 but nearer 4 per cent. The merit of good Kaffir shares, such as Crowns, Brakpan and Government Areas and, in the West African field, of Ashanti, is that the yields very adequately allow for the risks. * *
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