I am increasingly annoyed at the constant flack GB is getting for selling the UK’s national reserves of Gold between 99-02 at the so called bottom of the market.
I feel that that the criticism of the decision has cost the UK £7 billion yet this is misleading that is TODAY’S price not the price at the time the reserves were sold.
If it turns out there were political shenanigans going on, like secret deals with Goldman Sachs, the International Banking Establishment, or to manipulate the gold/$ price, then yes, this decision was flawed.
However taken in the context of prices at the time and the government needed some cash for what ever reason then its hardly fair to criticise the man.
Its always easy to say; “should have done” with hindsight. Yet GB wasn’t to know the future price of gold would be 4 x the price nearly a DECADE later was he ?
no one truly knows the top or bottom of any market do they ?
Is $1600 an ounce the top of the market ?
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Uk; Is Gordon Brown Really At Fault For Selling Gold At The Bottom Of The Market In 99-02?
Posted on July 20, 2011.
He didn’t sell it at the bottom of the market, he sold it at the market rate of the day. He also invested the money made by selling gold in foreign currencies and other bonds as he thought they would out perform gold over the foreseeable future.
If his other investments had out performed gold in market growth it would have been a good thing and he would have been praised.
If gold out performed his other investments in market growth it is a bad thing and he would have been criticised.
However the simple fact of the matter is we don’t know what has happened to his investments due to secrecy (why it is a secret I have no idea) but I suspect that it has performed roughly in line with gold as if it had massively out performed gold Brown and Labour would have told us prior to the election to demonstrate how good their financial judgement is – on the other side if it had massively under performed gold Cameron and the tories would have told us after the election to demonstrate just how much of a clown Brown was.
But until these investments that were made are sold, we haven’t lost anything the money is still tied up just in a different product.
Thank goodness there are still intelligent thinkers like Confused Hal.
The right wing media are well aware of your explanation but choose to give only a stark headline about ‘ Brown sells gold cheap’ Making this out to be a bad thing without also giving the other side of the story. I hope Hal’s answer will enable some of the more gullible to think further than the media headlines.
It wasn’t OUR gold in the first place.I find it funny when people say that the Government spend OUR money.Its not even OUR money and its out of OUR control and always has been.It their money not OURS.They sold Their gold not OURS.They spend their money not OURS.
Yes he is to blame for selling gold at the bottom of the market.. its just another indication of his poor judgement which denotes him has been the worst Prime minister since the Eden.
Gordon Brown made a big mistake selling gold just like he did.
There are all kinds of theories about that, especially since GB announced the sales in advance which guaranteed the lowest price at the time.
The most likely is that the sale was made to assist the Euro and the new European Central Bank.
Somewhat less likely is GB was desperate to find additional resources without affecting visible tax rates, very doubtful in my opinion.
The next possibility is it was sold to bail-out a massive “short” position on gold held by Goldman Sachs which threatened a 2008 type collapse at that time, quite possible given the ‘too big to fail’ status of that company.
The penultimate possibility is that GB was complicit with other European banks in manipulating the gold market in order, again, to help the fledgling Euro, once again quite possible.
The possibly least likely is that it was a part of coordinated central bank policy designed to remove gold from its position as a safe alternative to unstable fiat money, i.e. the world’s paper money which has no intrinsic value. If it was it certainly didn’t work.
The only thing we can be sure of is that it wasn’t done for the benefit of Great Britain.
Confused Hal is acting up to his name in his response. Gold is a ‘real’ physical asset that demonstrates a country’s willingness to honour its own currency and provides a valuable resource or collateral in times of economic turmoil. To sell it off in the interests of gambling or speculating in international currencies is not a prudent action for a Chancellor to engage in.
This gold wasn’t sold at the bottom of the market, it was sold at the going rate of the time. Gold has outperformed most other investments in the decade since, but this couldn’t have been easily foreseen.
To those respondents who complain that the gold sale was announced in advance, depressing the price available: the government sold just over 400 tons of gold. You can’t leak this quantity of gold onto the bullion market in dribs and drabs and hope nobody notices, the sale of this amount of bullion has to be announced in advance.
The total theoretical loss based on the 1999-2003 sale price and current prices is about £7billion. This does not take into account whatever return the investment of the sale money received (a secret, apparently…) and needs to be considered in the context of British annual GDP – £1.514 TRILLION pounds on latest figures. The gold reserve is essentially meaningless in terms of today’s national economy, it used to be important but these days is a fairly trivial part of the national economy. The gold sale didn’t achieve anything except bad headlines but is, frankly, a sideshow.
The issue is the fact there was no need to sell, back in 99-03 we were in a good financial position, there was no need to sell, the economy was growing year on year, government incomes were increasing, etc.
gold reserves are there as something for ‘a rainy day’ countries that can afford to build up a gold reserve do so in part as a security measure, that they have something valuable tucked away that is guaranteed to sell at a later date should the coffers run dry and a cash injection is needed, because we sold our gold we lost our back-up plan. And when the markets crashed in 08 we had nothing to oil the wheels with and have suffered because of it. because we had to borrow cash, rather than sell something and now to repay these loans we are cutting costs, had we still been sitting on a pot of gold, we could have sold the gold in 08 and would not have had to borrow so much money – this in turn would have left the country on more solid financial footing than it is currently on now.
The fact he sold it at the bottom of the market only compounds the stupidity of the initial decision. And it is a poor decision we will suffer from, for years to come.