Revealed: why Gordon Brown sold Britain's gold at a knock-down price

[BrilloPad]

Revealed: why Gordon Brown sold Britain's gold at a knock-down price – Telegraph Blogs

Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britain’s gold, forcing the price down and allowing the banks to buy back gold at a profit, thus meeting their borrowing obligations.

Or maybe GB was a twunt?

[hyperD]

Although it doesn't distract from the point that the "one-eyed Scottish idiot" is the worst politician to be inflicted upon the UK for centuries, this Telegraph story doesn't ring true. As one commenter points out:

I see that as usual a lot of people are getting very excited about this story, but no-one is doing any simple arithmetic. Maybe the proposal to make people do mathematics until age 18 isn't such a bad idea after all.

First of all, we are told that Brown sold four hundred (400) tons of Gold to save a anonymous Bank that was short two (2) tons. Well, first of all, Brown sold Gold from 1999 to 2002, so how much of a loss could someone have been showing on a 2 ton short at that time?

The Gold price at the beginning of 1999 was $287.5 an ounce, so if someone had gone short at the least price at any time between the collapse of the Gold bubble in 1980 and 1999, then they were not showing any loss at all, since Gold was never below $280 from 1980 to 1999. In fact, if they sold Gold and bought Bonds, they made money.

Well, I suppose we can play "let's pretend" and say that someone was short since before the Gold bubble, maybe since 1976, when Gold got as low as $100. In that case, by 1999 they were showing a loss of $187 an ounce. Wait a minute, though. If they went short in 1976, they were showing a loss of $750 an ounce in 1980. So a loss of $750 was survivable in 1980, but a loss of $175 an ounce in 1999 "called their solvency into question"? Oh well, it's called "let's pretend" for a reason.

OK, so did Brown's scheme work? Did he "rescue" anyone? He sold the Gold at an average price of $275, and as far as I can see. the lowest price during the period 1999-2002 was around $250, so he managed to suppress the price by $25 an ounce. That's only one seventh of the extreme potential loss of $175 to this anonymous Bank. So if that was his scheme, it simply did not work..

In fact, if someone was showing a loss of about 50% on a short of 2 tons, he would have been far better off to make the anonymous Bank a present of one ton of Gold, which would have been 0.25% of the UK reserves, and would have allowed us to profit from future Gold price rises.

I get two things out of this. First, this story is wrong and the official story is correct. Brown thought that the Euro would be a strong currency. In fact, I think Brown went short Gold himself. He sold Gold to buy Euros, aiming to sell the Euros later at a profit and then buy the Gold back. It didn't work out, but at least it makes sense, which is more than you can say about this story.

And the other thing I think is that as people have pointed out below, this story has been around the web for a long time, and probably the DT just picked it up and ran it without thinking it through very well.

[AtW]

Why was Brown selling gold which was surely owned by independent Bank of England?

Personally I think he sold it because he needed the money and "privitasing" gold would not have upset the unions.

[Doggy Styles]

Revealed: why Gordon Brown sold Britain's gold at a knock-down price – Telegraph Blogs

Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britain’s gold, forcing the price down and allowing the banks to buy back gold at a profit, thus meeting their borrowing obligations.

Or maybe GB was a twunt?

I'd go for twunt.

[TimberWolf]

Although it doesn't distract from the point that the "one-eyed Scottish idiot" is the worst politician to be inflicted upon the UK for centuries, this Telegraph story doesn't ring true. As one commenter points out:

Interesting theory, speculating on Euro's, but I prefer this one:

He sold the gold as quickly as possible, price was not a factor , so long as the amount raised covered up the economic catastrophe for just long enough, for him to claim he was some kind of saviour and dump the fallout on somebody else.The criminal b***ard.

The worst government we've ever had IMO and I'm not entirely convinced they weren't punishing the English for some war fought 100s of years ago <dons foil hat> or at least despised the English.

[TimberWolf]

Why was Brown selling gold which was surely owned by independent Bank of England?

Always makes me laugh.

[TimberWolf]

What reason does Brown give in his book? Assuming he has a book.

[BrilloPad]

What reason does Brown give in his book? Assuming he has a book.

I am not going to hand money over to GB to find out.

[hyperD]

Interesting theory, speculating on Euro's, but I prefer this one:


The worst government we've ever had IMO and I'm not entirely convinced they weren't punishing the English for some war fought 100s of years ago <dons foil hat> or at least despised the English.

Knowing what makes these scum tick, I wouldn't disagree with you there TimberWolf.

And on a brighter note - off to the Hersham beer festival - wooohoooo!

[doodab]

I don't really understand the fuss. 400 tons of gold is only worth about £20bn which would be nice to have in the bank but it's bugger all in the grand scheme of things.