British Gazette readers will recall Gordon Brown’s sale of 388.761578406 tons (395 metric tonnes) of our gold in 17 auctions between July 1999 and March 2002.
The average price achieved in those disposals was US $275.6.
Yesterday (7th October) the price of gold reached US $1,366 per Troy ounce. Thus the US $3,499,994,573 Brown received for the 12,699,544.894608 Troy ounces of gold is a mere FIFTH of the total of US $17,347,578,326 that gold was worth at one point yesterday. This represents a LOSS of US $13,847,583,753!!!!
Although the gold price has dropped slightly, analysts expect the gold price to remain at these levels whilst the global economic problems persist.
So why did Gordon Brown as chancellor dispose of all that gold? Well, contrary to what many readers may think, it was not due to the European Union. In fact, Brown’s decision to sell off half the U.K.’s gold reserves ran counter to the policy of the European Central Bank at the time. It was Brown’s Scottish Presbyterian upbringing that caused him to sell off the gold. He perceived “an intrinsic laziness” in the possession of gold. It simply: “sat in the vaults gleaming and did nothing.”
This of course shows the man’s complete lack of understanding of international finance and why he allowed the country to get into a situation it did in 2008.
Gold has always been a hedge against the depreciation of a currency.
In the 19th and early 20th centuries currencies were pegged to the value of gold. Germany’s massive increase in defence expenditure lead to Germany effectively going off gold before 1914 and the results of that conflict and the economic problems caused by it in the 1920s and 1930s led to the abandonment of the gold standard.
Gordon Brown believes that because of this, gold has no importance any more.
How wrong he is!!! Now that international currencies are not backed by any underlying assets each note is a mere promissory note whose value fluctuates widely.
Gold is a sold physical asset whose market value traditionally has run counter to the values of freely floating currencies. This means that in times of dire economic stress (like now) a nation’s gold reserves will rocket in value. The greater the degree of distress the greater the increase in the yellow metal’s worth. Gold therefore is a vital hedge against troubled times.
A prudent and sensible Chancellor of the Exchequer should BUY gold in times of economic prosperity when the value if LOW to protect the nation against such times as now when the gold price is high but the economy’s in a mess.
But then, Gordon Brown has shown himself to be neither prudent nor sensible. The tragedy is that he was squandering the nation’s money and not his own.