WORLD output of gold, excluding the production of the U.S.S.R., Mainland China, and countries associated with them, increased in 1964 for the eleventh consecutive year. The increase of about 3.4 per cent carried total production to the highest figure ever reached, about 40 million ounces, worth (at $35 a fine ounce) approximately $1,400 million (Table 42). This was almost entirely the result of increased production in South Africa. The comparable figure for the value of output in 1963 was $1,354 million; in 1962, $1,300 million; in 1961, $1,215 million; and in 1960, $1,178 million. The gold mining industry in South Africa again established new records; its production increased by more than 1.7 million ounces (6.2 per cent) to a total of 29.1 million ounces, equivalent in value to $1,020 million. This output constituted approximately 73 per cent of world production.

Gold Production

WORLD output of gold, excluding the production of the U.S.S.R., Mainland China, and countries associated with them, increased in 1964 for the eleventh consecutive year. The increase of about 3.4 per cent carried total production to the highest figure ever reached, about 40 million ounces, worth (at $35 a fine ounce) approximately $1,400 million (Table 42). This was almost entirely the result of increased production in South Africa. The comparable figure for the value of output in 1963 was $1,354 million; in 1962, $1,300 million; in 1961, $1,215 million; and in 1960, $1,178 million. The gold mining industry in South Africa again established new records; its production increased by more than 1.7 million ounces (6.2 per cent) to a total of 29.1 million ounces, equivalent in value to $1,020 million. This output constituted approximately 73 per cent of world production.

The number of tons of ore milled in South Africa in 1964 was about 1.5 per cent greater than in 1963, and the average grade of ore per ton milled rose from 6.861 dwt. in 1963 to 7.185 dwt. in 1964. By 1951 the average grade of ore had fallen to 3.756 dwt., but it has improved steadily since that time. Combined working profits from gold, uranium, and other products rose from R 313.0 million ($438.2 million) in 1963 to a record figure of R 332.6 million ($465.6 million) in 1964.

The value of production increased also in the Democratic Republic of Congo by the equivalent of $2.0 million, to $9.5 million, and in Colombia, India, Japan, and Rhodesia by lesser amounts, raising the value of production in these countries to the equivalents of $13.1 million, $5.2 million, $16.1 million, and $20.1 million, respectively. Gold production also increased sharply in the Philippines, where output was 13.3 per cent higher than in 1963, being equivalent to $14.9 million. This increase has been attributed mainly to the resumption of normal operations by a major company which suffered loss of production because of a prolonged strike in 1963, to the extension to 1967 of the Gold Assistance Act, and to tax exemption granted to certain mines.

Table 42

Gold: Value of World Production, 1940, 1945, and 1960-641

(In millions of U.S. dollars at US$35 a fine ounce)

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Source: International Monetary Fund, International Financial Statistics.

Excluding the output of countries in the Sino-Soviet area.

These figures include estimates for data not available.

Production in Canada declined again in 1964, falling to 3.8 million ounces, equivalent to US$133.0 million; this was the smallest output since 1948, when it totaled 3.5 million ounces (US$123.9 million). The 1964 figure compares with 4.0 million ounces (US$139.0 million) in 1963 and 4.2 million ounces (US$145.5 million) in 1962. The year of peak output in Canada was 1941, when 5.4 million ounces (US$188.0 million) were mined. In Canada, as elsewhere, costs of production in the gold mining industry have been rising. Production from new sources is thought unlikely to offset the declining output resulting from the closure of mines that are reaching the end of their reserves.

In the United States, whose output is the next largest to that of Canada (if the U.S.S.R. is disregarded), production declined again, to approximately 1.4 million ounces ($50.6 million), from 1.5 million ounces ($51.4 million) in 1963, after having been about 1.6 million ounces ($55 million) in both 1961 and 1962. The peak year for the United States was 1940, when 4.9 million ounces, equivalent to $170 million, were produced. Australia’s gold production continued to decline in 1964, amounting to approximately 1 million ounces ($34 million). In 1963, output had been 1.03 million ounces ($36 million) after it had remained steady at about 1.09 million ounces ($38 million) in 1960, 1961, and 1962. Production also declined in Ghana, by the equivalent of. $2.0 million, to $30.2 million; in Mexico by $0.9 million, to $7.4 million; and in Nicaragua by $0.2 million, to $6.9 million.

Gold has become Bolivia’s fourth largest export, and production has increased steadily over the past few years. A recent geological survey estimated the gold reserves in northeastern La Paz at between $1 billion and $3 billion. It has been estimated that, with modern techniques, Bolivia could be producing gold valued at approximately $22 million yearly by 1972. In southern India, the Geological Department of Kerala State has begun investigations of gold deposits in parts of the Kozhikode district. It has also been reported that gold can be extracted on a profitable basis from the deposits in South Wynaad and Nilambur areas.

Sales of gold by the Soviet Union, totaling the equivalent of approximately $330 million in the early months of 1964, have drawn further attention to Russian gold production. These sales, understood to be prompted by a need for foreign exchange in connection with grain purchases, compare with sales equivalent to $550 million in 1963 and $215 million in 1962. The official Russian news agency, Tass, has asserted that Russian gold sales in 1963 did not deplete that country’s gold reserves. A member of the Soviet State Geological Committee has claimed that a large new gold field, which has been discovered on the Kolyma River in the Yakutsk region, could be the biggest in the world. Another report from the East German news agency, ADN, mentioned new gold discoveries in Central Asia, Kazakhstan, and Transcaucasia, which are estimated to be able to produce as much gold as all the east and northeast regions of Russia produce at present. It has also been reported that modern machinery and mining methods are now being employed to increase production.

In general, the gold mining industry remains concerned by the decreasing gap between rising costs of production and the fixed price of $35 a fine ounce. Several governments have granted assistance to their gold mining industries; in some countries this assistance has taken the form of subsidies. These arrangements are mentioned below.

Gold Holdings

The monetary authorities of the world are estimated to have added about $725 million in 1964 to their stocks of gold (Table 43 and Chart 28); this compares with additions of about $840 million in 1963, $330 million in 1962, $600 mil-Ion in 1961, and $225 million in 1951, the year in which the smallest postwar increase was recorded. The holdings of the Sino-Soviet area have not been included in these figures, but those of the International Monetary Fund, the Bank for International Settlements, and the European Fund have been taken into account. World reserves of monetary gold, thus defined, amounted to the equivalent of approximately $43 billion. The important movements in the distribution of reserves during 1964 are discussed in Chapter 6.

The amount of newly available gold in the Western world in 1964 was of the order of the equivalent of $1,730 million. Absorption by private holders, industry, and the arts in 1964 thus appears to have been in the region of $1,005 million, i.e., some $60 million less than in 1963.

Chart 28.
Chart 28.

Gold: Estimated Supply and Absorption, 1951–64

(In millions of U.S. dollars)

Table 43

World Gold Reserves: Sources of Changes, 1962–64

(In millions of U.S. dollars)

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Sources: International Monetary ‘Fund, International Financial Statistics, and Fund staff estimates.

Excluding stocks held by countries in the Sino-Soviet area.

Totals do not equal the sums of the items because of rounding.

Gold Markets and Prices

New York

As fiscal agent for the U.S. Treasury, the Federal Reserve Bank of New York stands ready to buy gold at the price of $34.9125 a fine ounce and to sell gold at $35.0875 a fine ounce for official monetary purposes. In 1964, it sold gold equivalent to $36.2 million (net) to foreign countries and international institutions. In addition, the equivalent of $89.0 million was sold domestically for industrial, professional, and artistic uses. The total decrease in the U.S. gold stock during the calendar year 1964 thus amounted to some $125.2 million (Table 44), compared with $460.7 million in 1963 and some $889.9 million in 1962. Purchases of gold from foreign countries in 1964 included the equivalent of $617.7 million from the United Kingdom, of which approximately $300 million resulted from the United States’ 50 per cent share in the operations of the Gold Pool, described in last year’s Annual Report (p. 131).

The amount of gold held under earmark by the Federal Reserve Banks for account of foreign central banks, governments, and international institutions fell in 1964 by the equivalent of $255.3 million, to $12.7 billion. This fall was due primarily to the fact that in 1964 France repatriated in gold the equivalent of some $422 million.

Table 44

U.S. Gold Transactions, 1963 and 1964

(In millions of U.S. dollars)

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Two hundred million dollars of these sales formed part of the transaction initiated by the purchase from Italy shown.


Over the period May 1,1964 to April 30,1965, the dollar price of gold (converted at the buying price for dollars in London at the time of the daily fixing) fluctuated within a range of about 111/16 cents—between a maximum of $35.17¾ a fine ounce on March 5, 1965 and a minimum of $35.0611/16 a fine ounce on August 25, 1964 (Chart 29). In the same 12-month period in 1963/64 the corresponding range was 55/16 cents—between $35.113/16 and $35.05⅞ a fine ounce.

On May 1, 1964, the equivalent price at the “fixing” was slightly above $35.07⅜ a fine ounce and, although there was a steady demand for bar gold, the price did not fluctuate by much more than 1 cent either side of $35.08 until mid-September. During this period, the Gold Pool was able to acquire a modest amount of gold becoming available from new production. The heavy sales of gold by the U.S.S.R. in the first three months of the year were not, however, repeated. At the beginning of August, the attack on U.S. naval craft in the Gulf of Tonkin caused a flurry in the gold market, and on August 6 dealings were reported at about $35.10 a fine ounce after the “fixing” at $35.0815/16 a fine ounce. During the summer the exchange rate for the pound sterling had been progressively easing and on August 27 the sterling price at the “fixing” was 252s. 0¼d. a fine ounce. This was the first time since July 25, 1961 that the sterling price of gold had exceeded 252s.

Private demand for gold remained modest during August but increased sharply in September and October, as the approach of elections in both the United States and the United Kingdom caused some nervousness in the markets. This nervousness was accentuated in October by the political news from Moscow, reports of a worsening situation on the Malaysian/Indonesian border, and the news of the success of Mainland China’s first atomic explosion. Following the results of the British elections on October 16, the demand for gold, coupled with a weakness of sterling in the exchange market, pushed the sterling price at the “fixing” to 252s. 4¾d. a fine ounce, the highest point of the year, and the U.S. dollar equivalent price to about $35.123/16 a fine ounce, the highest price in U.S. dollar terms since the Cuban crisis in October 1962. While the authorities effectively controlled the market through the operations of the Gold Pool, speculation against the pound sterling persisted, and on November 23 the bank rate in London was raised from 5 per cent to 7 per cent. The sterling price at the “fixing” on November 23 was lower by 6¼d., reflecting an improvement in the dollar/sterling exchange rate, but speculation persisted and massive international support was mustered in defense of the existing parity of the pound. During this exchange crisis, the gold market had been fairly active but was not much affected by events in the exchange market. In mid-December, demand for hoarding was noticeable, and at the end of the year there was some covering of positions for balance sheet purposes.

Chart 29.
Chart 29.

Gold: Price in London Market, Monthly Averages, March 1954-April 1965

(In U.S. dollars a fine ounce)

A strong wave of buying started in January 1965, when there were rumors of the intention of the U.S. authorities to remove the gold reserve requirement against deposits in the Federal Reserve Banks and against Federal Reserve notes, and some publicity was given to the French intention to convert surplus dollars into gold. On January 8 there was a larger turnover of gold in London than on any day during the Cuban crisis. The “fixing” price was equivalent to nearly $35.15 a fine ounce, and the authorities met demand later in the day at prices up to $35.19 a fine ounce. Demand abated only after the U.S. Treasury issued a firm statement of its intention to maintain the existing price of gold. For the remainder of January, the price remained at about $35.12 a fine ounce, but demand again escalated early in February, on the appearance of French proposals for a reform of the international monetary system. The deteriorating situation in Viet-Nam caused some buying by speculators and others, and the price increased steadily until March 5, when at the “fixing” it reached, in U.S. dollar terms, a peak of slightly above $35.17¾ a fine ounce. On March 3, President Johnson signed the bill eliminating the requirement of a gold cover for Federal Reserve Bank deposits, thus freeing some $5 billion of gold to meet potential foreign claims. This measure had little immediate impact on a market overshadowed by events in Southeast Asia; nevertheless, with minor fluctuations, the price of gold in London declined steadily until April 30, when the price, in U.S. dollar terms, at the “fixing” was $35.10⅝ a fine ounce.

The Gold Pool continued to operate effectively and to exert a stabilizing influence in the market during 1964. Increased new production, plus substantial sales of gold by the U.S.S.R. in the first three months of the calendar year, enabled the Pool to share out the equivalent of some $600 million of gold to its participants, an amount similar to that distributed in 1963. No contributions to the Pool had to be made in 1964 by participating central banks.

During 1964, the United Kingdom imported some 40.9 million ounces of gold bullion, equivalent to $1,429.8 million, compared with 34.3 million ounces ($1,200.5 million) in 1963 and 34.1 million ounces ($1,192.9 million) in 1962. Of the imports in 1964, the equivalent of $1,106.0 million came from South Africa and the equivalent of $268.6 million from the U.S.S.R. These figures compare with $816.1 million and $281.2 million in 1963, and with $664.7 million and $106.9 million in 1962. Exports from the United Kingdom amounted to 17.6 million ounces, equivalent to $615.8 million, whereas in 1963 the total was 19 million ounces ($664.5 million), and in 1962 it was 29 million ounces ($1,013.8 million).

Other Developments

In markets where gold is bought and sold against local currencies (Table 45), the day-to-day movements of the U.S. dollar equivalent prices have varied from the London pattern because of the special characteristics of each market and the fluctuations in the intermediary rate of exchange. Prices for bar gold and gold coins in local currencies in the period May 1, 1964 to April 30, 1965 rose steadily under pressure from speculators because of the unsettled situation in Southeast Asia and other political uncertainties.

In Bombay, the U.S. dollar equivalent price for bar gold fluctuated quite widely. From a low point of $74.33 a fine ounce in the week ended May 8,

Table 45

Gold: Prices in Various World Markets, End of April 1964 and 1965

(In U.S. dollars a fine ounce, at day’s dollar rate)

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Average for week ended April 24. This figure was obtained by conversion from quotations for 14-carat gold; transactions are limited to gold of that purity.

1964, it rose to $81.24 a fine ounce at the end of August 1964, but then fell sharply to $74.23 a fine ounce in the week ended September 18. It would appear that the reduced demand for gold at this point reflected the gold control measures that the Indian Government had previously introduced.1 (The number of dealers and refiners had fallen from about 27,000 to some 12,000, the quantity of gold used for industrial purposes had been reduced by approximately 50 per cent, and loans of scheduled banks against the security of gold had dropped from a peak of Rs 420 million [$88 million] in October 1962 to Rs 180 million [$38 million] in June 1964.) After September 18, the price of bar gold fluctuated narrowly but with an upward tendency, reaching $84.30 a fine ounce in the week ended April 30, 1965.

The activity in the London gold market on January 8, 1965 was reflected in Paris, where the intervention of the authorities brought the price of the one-kilogram ingot down to F 5,640, from a peak of F 6,000, after what was described as an unprecedented demand for this type of bar gold. The turnover in Paris on January 8 was reported to be in the region of F 22.5 million ($4.6 million).

In Hong Kong, trading in gold was reported to have been suspended temporarily at the end of the first week in March 1965 after the price had been forced up to HK$271 an ounce, 0.945 fine, equivalent to about US$41 a fine ounce.

Gold Transactions Service

Since the inauguration of the Fund’s gold transactions service in March 1952, the central banks of 26 member countries and 5 international organizations have purchased or sold gold through the facilities provided by the Fund. In all, 120 transactions, amounting to about $1,093 million, have taken place since March 1952. Although the creation of the Gold Pool has had the effect of virtually eliminating the need for the service, one transaction for the equivalent of approximately $10 million was completed in the year under review, and the Fund received two or three inquiries as to whether it was aware of any sellers of gold.

Changes in National Policies Affecting Gold

In Argentina, the Central Bank suspended trading in gold coins and bullion on June 15, 1964.

In the United States, the Secretary of the Treasury issued an order, effective on April 25, 1964, removing the restrictions on the holding of U.S. gold certificates issued before January 30, 1934. These certificates, at the time of their issuance, were redeemable in gold. By his order of December 28, 1933, as supplemented and amended by his orders of January 15, 1934 and July 14, 1954, the Secretary of the Treasury required the delivery to the United States of gold bullion, gold certificates, and gold coins situated in the United States, except gold coins having a recognized special value to collectors of rare and unusual coins. By virtue of a general license, all persons subject to the jurisdiction of the United States may now acquire, hold, dispose of, export, and import U.S. gold certificates issued before January 30, 1934, whether situated inside or outside the United States. Such certificates are not redeemable in gold, but may be exchanged at their dollar face value for other lawful U.S. coin or currency which is legal tender.

As stated above (p. 101), the requirement of a 25 per cent gold cover for deposits in Federal Reserve Banks has been eliminated. The statutory requirement regarding a 25 per cent gold cover for Federal Reserve notes was not affected, how ever.

In Spain, the Government decreed in April 1965 that gold bullion and gold coins required to be surrendered to the Government in 1937 could be handed back to private ownership because of the favorable evolution of the Spanish economy in recent years. Requests for the return of the gold are to be made to the Institute of Foreign Exchange; however, owners have been given the option of selling their gold to the Institute at the current price.

Gold Subsidy Programs

The gold subsidy programs of the Governments of Canada,2 the Philippines,3 South Africa,4 and Rhodesia5 discussed in previous Annual Reports have continued in operation during the past year. The gold subsidy program for the Philippines was extended, on the same terms and conditions, for a further three years until June 1967.

In Australia, as in most other gold-producing countries, rising production costs in conjunction with a fixed official price for gold have continued to create problems for the industry. The assistance which the Australian Government has been making available to the gold-mining industry in recent years has taken the forms of subsidies and development allowances. As the legislation authorizing this assistance was due to expire on June 30, 1965, the Australian Government recently reviewed the position of the industry and introduced new assistance arrangements. Under these arrangements the development allowance scheme has not been renewed and future assistance to the industry will be provided by continuing the subsidy scheme in a liberalized form. The liberalizations were designed to absorb to some extent the development allowance scheme into the subsidy scheme and to take account of the deterioration in the industry’s general financial position since the Government last reviewed the question of assistance three years earlier. The new measures increased the maximum rate of subsidy for large producers from £ A 3 5s. 0d. to £ A 4 0s. Od. per ounce, and the flat rate subsidy for small producers from £A 2 8s. Od. to £A 3 0s. 0d. per ounce, with a consequential adjustment in the provision relating to the rate of subsidy payable to producers with an output of more than 500 ounces a year who elect to be treated as small producers. The legislation introducing the new arrangements provides that they will operate for a period of five years.


See Annual Report, 1964, page 108.


Annual Report, 1959, pages 149-50; 1961, pages 125-26; 1964, page 109.


Annual Report, 1962, page 164; 1963, page 181.


Annual Report, 1964, page 109.


Annual Report, 1964, page 109.


Annual Report, 1960, page 144; 1963, page 181.