The soaring price of gold and the drop in the exchange value of the U.S.?
The soaring price of gold and the drop in the exchange value of the U.S. dollar have generated a rush of speculative buying in world money markets.
However, at La Bourse (the French Foreign Exchange) on Wednesday (16 May) the dollar stages a slight recovery.
In Paris on Tuesday (15 May), Mr. Herbert Stein -- Chairman of President Nixon's Council of Economic Advisers -- dismissed speculation about a further evaluation of the U.S. dollar. Mr. Stein said this as reports from Washington indicated that the U.S. balance of payments deficit for the first quarter of this year was six times greater than the last quarter of 1973. However, on Wednesday (16 May), the dollar grew stronger as the price of gold dropped.
In London on Wednesday, stock markets reacted well to news of favourable British Trade figures. On London foreign exchanges, gold reached a record peak on Tuesday (15 May) at 115 U.S. dollars (???48 sterling) per ounce. On Monday (14 May) the gold price broke through the barrier of 100 dollars an ounce. Since then, the dollar has ben under its fiercest pressure since the gig monetary crisis of last March. However, on Wednesday (16 May), the dollar staged a comeback on the London exchanges,m gaining more than one cent against the pound sterling. Gold values fell back to $105 (???43 sterling) an ounce, two-and-a-half times the official rate at which monetary gold is valued by central banks.