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| The Golden Age of Brownomics |
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| Written by Administrator | |
| Tuesday, 22 January 2008 | |
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Pre-announcement caused price slump His chosen method - auctioning off blocks of 25 tonnes at a time over a period of 3 years - was widely criticised at the time. His announcement of his intentions precipitated a slump in gold prices. Eventually, by March 2002 (the last of the big sell-offs), he'd raised £2.24bn, by selling just shy of 342 tonnes of gold - leaving 286 tonnes in reserve. Since March 2002, an additional 3.8 tonnes has been sold, raising a further £32.6m. Sold! For 35% of its true value Had the Gold Reserve been maintained at June 1999 levels, then at December 2007 prices the total value would be a very healthy £8.82bn - an unprecedented £9.94bn at the recent peak price of $905/oz. Instead of a mere £2.24bn (the equivalent of £1.9bn adjusted for inflation), the 342 tonne sell-off would raise £5.40bn at today's prices - £3.5bn more in real terms than was raised by selling in 1999-2002. That's a lot of hospitals. Labour largesse Possibly the worst aspect of the sell-off, however, was its timing. The UK was experiencing healthy economic growth and low government spending (The chancellor at the time, Gordon Brown, was keeping to self-imposed Conservative spending limits) - but he was about to release the shackles of Labour largesse, and he needed to fund it. In effect, the gold was flogged to fund Labour propaganda. Unfortunately, the result of this splurge is now clear to see: Not only has he squandered the £2.2bn he raised at the time, but now that the world economy has faltered Brown is left with much reduced reserve money with which to try to stabilise the UK's economy - leading to a deep and prolonged recession. Thanks, Gordon.         |
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| Last Updated ( Friday, 01 February 2008 ) |
As the price of gold tops new records - around $900 (£450) per ounce at the time of writing - it's worth remembering that in 1999, the then fresh-faced "prudent" chancellor Gordon Brown decided to auction off approximately half of the UK's gold reserve.| < Prev | Next > |
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