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THE HONG KONG WEEKLY PRESS &
London at the beginning of last month was due to a large selling on Continental account, mainly French. In all probability the French silver represents old silver coinage melted down and refined, the supply of which is now found to be in excess of the amount re- quired for the new French silver coinage, which consists only of 5-franc pieces. These, moreover, are much smaller in size than the old pieces, owing to the fall in the value of the franc. It is impossible to say how long the French sales will continue, but they add another adverse factor to the many which oppress the silver market. An in- teresting statistical effort has been made by one of the firms in the London bullion market. It shows the monthly fluctuations in the price of silver since 1833, together with the yearly average, imports of the metal and exports to the East, and other particulars. Marked steadi- ness was shown by the price in the first part of the period covered, the yearly average up to 1873 ranging from about 59d. to 62d. Wide fluctuations occurred as a result of the Great War, the average rising from 23 11-16d. in 1915 to 61 7-16d. in 1920. Last week-end silver stood at less than 18d., a drop of 43d. in ten years. Reuter tells us in a Shanghai message that the value of the tael has dropped from 111d. in 1920 to less than 23d. to-day. That comparison is rather misleading
unless it is remembered that it was just ten years ago the big slump in silver came. In 1920 the Hong Kong dollar went up to 74d. at one time, but its lowest point during that year was 35d., since when the value of the dollar has been steadily decreasing together with the decline in silver.
Mail advices from London state that the new low level touched by silver last month scarcely occasion- ed any comment, doubtless for the reason that the business world had been amply warned as to the posi- tion, and was prepared for lower prices. For weeks the bullion- brokers had represented the outlook in the gloomiest terms, and such buying as low prices had induced was not of sufficient importance to stem the rot. Indo-China has add- ed to the pessimism by adopting gold as her currency standard, and then came the disquieting news from Persia that the Medjliss had passed a Bill prohibiting the import of silver. Persia, like China, has suffered severely through the depre- ciation of the metal and has been contemplating the institution of a gold basis for her currency. The new law will probably prove the first step in this direction. The possibility of the adoption of gold as a currency standard by "silver" countries represents, of course, a most serious menace to the future of silver prices. Of more immediate moment, however, to silver-using countries, of which China is by far the most important, is the serious effect of the low price of silver on the exchange value of their currencies and the resultant in- creased cost of their imports. The greatly increased cost of foreign goods owing to the low exchange value of silver currency must result in reduced buying, and the possible elimination of so-called luxury lines altogether. Even the Chinese ex-
porter receives little, if any, advan- tage from the greater amount of dollars to be got for his goods. These move slowly from the war- ruined interior, and the benefits of cheap labour have been off-set by recently imposed heavy taxation. Moreover, silk and tea, China's staple exports, are little wanted to-day in the world's markets. An- other aspect of the question is of concern to British exporters, parti- cularly the textile trades. Manu- facturers in China are making lines formerly obtained from Lanca- shire, and the silver crisis cannot but help giving an impetus to them, the effect of which must endure.
Curtailment of production is con- sidered to be the most likely factor to stabilise the silver market, but as a large percentage of the silver produced is a by-product, it is necessary to examine the lead, copper, and zinc markets in order to get an idea of the prospects of restricted silver production. The outlook for copper for this year is considered good. Production should remain high, although it is prob- able that the figures for the first half of 1930 will be lower than those for the corresponding period of 1929. The situation in regard to lead is also good, and there is no indication of any material falling- off in the production of this metal. The zinc market declined sharply at the end of 1929, and the present level should cause a material cur- tailment of production, both in the United States and elsewhere. Not much comfort can be derived from these reports, for good prospects in regard to copper and lead are bad prospects for those who hope for a diminished production of silver. Data recently available, indicate that the world production of silver in 1929 will closely approximate that of 1928. An estimate of 256,500,000 ounces indicates that there will be 61,000,000 ounces from the United States, 105,000,000 ounces from Mexico, and 22,500,000 ounces from Canada. Of the remainder 28,500,000 comes from South America, principally Peru. Total supplies of silver, including de- monetized Continental coin and Indian Government sales, are estim- ated to be in excess of 300,000,000 ounces.
What will happen next it is not easy to say. The general opinion at the beginning of 1929 of those who were in a position to judge proved to be a long way out, and the same thing may happen in regard to forecasts for the present year. China is expected to be the chief consumer of silver during 1930, but the continued absorption of the metal depends upon trade conditions, which in turn very largely depend upon the stability of the political situation. The end of civil war would bring a speedy recovery of trade, but what pect is there of domestic tranquility pros-
in China? The inquirer who re- quires enlightenment on this point will find it in Mr. BELL's speech of ten days ago. There is nothing optimistic in the silver outlook for 1930 except that possibly the un- precendented low price is in itself reason to hope that the decline cannot continue, but this hopeful prospect depends upon a very dubious possibility. Meanwhile we are faced with the very definite and
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disconcerting reality that the cost of living is rapidly increasing while the value of the dollar is dwindling.
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