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Dear Member

I have to comment Costas' opinion [OPE-L 2234] and Allin's opinion [OPE-L

2123 and 2240]. But for now I try to observe the relation between the cost

price of gold (the output cost of gold) and the standard of price in order to

show you my opinion.

The cost price of of gold is the price in gold volumes to represent the total

sum of values of both the constant capital and the valuable capital which are

invested in gold productions. We can show the price of ordinary commodity in

the following formula.

a commodity price = (the commodity value /the value of a unit gold)*the price

of a unit of gold -------(1)

Therefore the output cost of a unit of gold can be formularized in the

followings.

the output cost price of a unit of gold = {(values of the constant capital /

values of a unit of gold)*the price of a unit of gold} + {(values of the

valuable capital / values of a unit of gold)*the price of a unit of

gold}={(values of the constant capital + values of the valuable capital)/

values of a unit of gold) * the price of a unit of gold ----(2)

Values of a unit of gold is an individual value in the marginal mine of gold

(C+V+M (=Surplus value)). Consequently, the output cost in the marginal mine

of gold is the followings.

the output cost price of a unit of gold = {(C+V)/(C+V+M)}* the price of a

unit of gold ---------------(3)

*The price of a unit of gold* in the formula (1) is the official gold price

(the reciprocal of the standard of price) under the convertible system and

the gold price as the reciprocal of the de facto standard of price under the

unconvertible system. Under the unconvertible system the de facto standard of

price depreciates with the deterioration of the currency (proceeding of

inflation). Then the price of a unit of gold rises up and so does the output

cost price of gold. Thus the the output cost price of gold become an

indicator of the de facto standard of price.

On the supposition that the ratio of {(C+V)/(C+V+M)} in the gold industry is

the letter r, the price of a unit of gold multiplied by *r* makes the output

cost price of gold. What is the price of a unit of gold is the money name

given to a unit of gold. Accordingly what is the output price of gold is

nothing except the money name given to *r* unit of gold. If we consider the

output cost of gold directly, it is the total amount of both the capitalistic

cost spent for the gold production, that is, the price of means of gold

production and the wage of labor in the gold industry. It means the money

name given to gold volumes corresponding to (C+V ) of a unit of gold.

If we get both the output cost price of marginal gold mine and the official

gold price under the convertible system where there isn't any estrangement

between the official gold price and the de facto standard price of gold, we

could calculate the value of *r* by the formula (3).

For now I try to calculate the value of *r* as an approximate value with the

data before the double gold price system (1968) when the gpld market price

corresponded to the official gold price. However I cannot help using the data

of the average cost in the gold mine (though strictly it must be the cost in

the marginal mine).

The official gold price in South Africa was 25 Rand per a ounce during 1949

and 1971/12. That is, A ounce of gold =25 Rand = $35. When I calculate a

weight average of the output cost of gold according to IMF (Staff paper, Vol.

XV, No3,1968, p.483, Chart 6), it is about 17.1 Rand in 1961 and about 16.6

Rand in 1965. Eventually I got 0.68 in 1961 and 0.66 in 1965 as the value of

*r*.

I try in turn the same calculation according to the data of the

Wirtwatersland Gold Vein in South Africa in 1967 (Rae Weston, Gold: A World

Survey, 1983, p.146) which said us that in the vein 30 million ounces of gold

were produced as a whole and its average cost was $21 per ounce. Eventually

we could get 0.6 as the value of *r*.

As we should put a couple of premises into this attempt, it is difficult to

get the exact value. But here I think the value of *r* is approximately

betweem 0.6 and 0.7. This value, that is the output cost of gold implicates

the important means as the indicator of the de facto standard of price.

the output cost orice of gold = 0.6 or 0.7 * the price of a unit of gold (as

the reciprocal of hte de facto standard of

price)---------------------------(4)

Btw, the value of *r*, that is, the value of (C+V)/(C+V+M) in the gold

industry should be stable if the organic composition of capital doesn't

change. SOST said about the organic composition of capital in the gold

industry of South Africa, *according to a rough estimate based on the Annual

Statistics of Business in the Gold Mines of South Africa, in the considered

period (1940~75), the ratio in the gold of the end product between the died

labor and the live labor didn't change so much*(Sozialistischen

Studiengruppen(Hrsg), Gold,Preise, Inflation, VSA Verlag, 1979, S.24).

Therefore, if the ratio between the died labor(C) and the live labor(V+M)

didn't fluctuate so much, the vale of *r* could be stable in general.

We can estimate the de facto standard of price since 1968 by the above

observation and data. But it isn't the subject here.

bye

Best Wish

Akira

#############################################

MATSUMOTO, Akira

Visiting Scholar

Department of Economics,

University of California, Riverside

1150 University Avenue

Riverside, CA 92521-0427 USA

Phone 909-787-5037x1575 or X1570

Fax 909-787-5685

Email: akiram@mail.ucr.edu

________________________

Associate Professor on Money and Banking

Department of Comprehensive Policy Making

school of Law & Letters

EHIME University

Matsuyama, Ehime

790-8577, Japan

Tel:+81-89-927-9237(office)

Fax: +81-89-927-8916

E-mail: amatsu@ll.ehime-u.ac.jp

##############################################

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