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Original poster

All those who keep saying 'but he sold our gold' I'm interested in why it bothers you so much, ta muchly.

113 replies

Beachcomber · 04/05/2010 08:10

Thanks to anyone who wants to explain a bit to me about this because I don't really get the point you're making.

I understand that GB sold about half of the UK's gold reserves at a time when the price was quite low. It is easy to say now, with hindsight, that it wasn't a good time to sell (although that would only take into account price and not the reason behind the sale). However the money was invested in currency, right? So it isn't like it isn't there anymore, it is just in a different form (euros, dollars and yen).

Also AFAIK the point of selling some gold was to make a comitted move to an economic policy which would inhibit fluctations in inflation. GB said he was committed to stable inflation (appararantly this is what he was referring to with the 'boom and bust' statement).

So to those who seem upset about this move can you tell me why cos I don't get you. (Please try to present arguments and facts and refrain from personal attacks on the PM about being 'a liar' and 'incompetant'.)

Here is a link to something which explains how I see the gold issue.

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Original poster
Beachcomber · 04/05/2010 19:31

So am I to conclude that the only reasons this is being held against him are; he sold when the price was relatively low (I believe it had been consistently low for quite some time) and he announced the sale (which seems to have been a legal requirement)?

OK so how does that stand against the idea of making the reserves work to generate money instead of just sitting there/stabilising inflation/generating revenue for much needed public spending/committed move away from gold standard legacy?

Traders may well have been aghast but then their values are rather different to those of Mr Brown methinks.

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MintHumbug · 04/05/2010 19:17

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said · 04/05/2010 19:11

Oh, I like this thread. Thank you, it's very informative.

BeenBeta · 04/05/2010 19:06

Beachcomber - you have had the reasons.

Selling at the bottom of the market and telling the market beforehand that the sale was going to take place. Working in the market at the time, as I was, I know traders were agahast at how badly it was handled.

MmeLindt · 04/05/2010 19:06

The plot thickens.

We need a world class economist on here to tell us straight. Where is Jed Bartlet when you need him?

Original poster
Beachcomber · 04/05/2010 19:03

Well I'm kinda surprised by how few MNers have come to explain why Selling The Gold was such a Bad Thing saying as it seems to be so agreed as being so bad.

I have just seen references to it on yet another couple of threads. Come on folks I thought you had a real grown up informed reason for holding this against him!

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Original poster
Beachcomber · 04/05/2010 15:18

That's interesting florence, thanks.

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Original poster
Beachcomber · 04/05/2010 15:14

It would appear that the currency reserves bought by GB are placed in investments which generate revenue. This revenue is being used by the government as public funds.

Apparently an element of the decision was to move away from the old fashioned stocks of gold sitting doing nothing towards making the money work and generate revenue and provide lending.

This comment is interesting from this link;

"Are you sure you're not indulging in a bit of hindsight bias here?

Can you demonstrate that Brown's decision was different from a normal commercial one, to the extent that, at the time, for the UK treasury, the sale of gold did not make good sense? If so, please detail these differences, because you haven't done so yet.

If not, and Brown's decision can be compared to all the other commercial decisions that were going on between 1999 and 2002, then I really don't think there is cause for much criticism. If one accepted the rationale of the time, the holding of gold rather than interest-bearing securities was seen as a major wasted opportunity. No doubt most other Chancellors would have chosen not to sell gold, but I'd suggest that their decisions would have been from a lack of courage to be imaginative rather than from a strong belief that maintaining gold holdings was the correct route. If, at the time, gold was unquestionably the correct investment, why was there not a general exodus from paper stocks into gold?

Brown's made plenty of errors of judgment since 1997, and maybe this was one of them. But, without the use of hindsight, I don't think it's that obvious that it was."

Mmm interesting.

I wonder how many of the 'he sold our gold' people have benefited from GB's investment?

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florenceuk · 04/05/2010 15:04

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florenceuk · 04/05/2010 15:01

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megcleary · 04/05/2010 14:55

I think us ordinary people are prone to wild opinions as people in power rarely answer questions, all media appears to have affiliations some of which I have learned of in this election (naive).

There appears little accountablity in public life.

Original poster
Beachcomber · 04/05/2010 14:46

Something I have heard (but don't know if it is true) is that GB was legally required to announce the sale due to a law which prevents governments from speculating on gold. Will try to find out more about this.

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Original poster
Beachcomber · 04/05/2010 14:43

Exactly MmeLindt.

I keep hearing 'he sold our gold' and my initial uninformed reaction was 'gosh that sounds bad, I guess if people are saying they wouldn't elect him because of that then it must be really bad'.

But nobody ever has a solid reason for telling me why it was so bad and nobody ever mentions why the gold was sold in the first place. I know for a fact that a lot of people think he sold the gold off cheaply in order to quickly make some cash in order to give it to benefit scroungers people who don't deserve it.

Tis just misinformed crap. (I don't mean people on here by the way).

I find it a bit worrying that people will throw about big misinformed opinions of a man who has done a fine fine job of saving the UK's financial bacon in a global recession (that he predicted and tried to get other countries to join him in globally planning for).

But then some people seem to think that GB is single handedly responsible for the recession in the UK .

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megcleary · 04/05/2010 14:16

I agree Mme Lindt not just this topic but in many areas MN has pointed me in directions and opened my eyes in areas that I wouldn't have found on my own.

It is a great forum for exploring most topics.

MmeLindt · 04/05/2010 14:02

Meg
sorry, was not meaning that the people on this thread have not informed themselves. I meant that generally in this election there are a lot of populist rantings. I was off on a tangent.

I meant that it was great that MN gives us the chance to discuss these issues and see what it is all about rather than just accepting the "truth" as reported in the press.

megcleary · 04/05/2010 13:49

But people have tried to inform themselves, links to many interesting articles and cohernt arguements here, TBH I should have asked MN before I asked GB!

Boils down to we need to hear from him what the reasoning was and keen to know what the investments are worth now.

This I know will never happen.

MmeLindt · 04/05/2010 13:16

Fascinating thread.

This highlights a massive problem with politics today, imo.

"Brown sold our gold" as a reason not to vote for the man.

But very few people have the understanding to explain why this is seen to be bad, and if it is really bad.

It is easy to rant about the selling of the gold reserves, or the immigrants or Muslims. Sitting down and truly informing oneself of the details of the issue takes time and effort and too many people don't do this.

Igglybuff · 04/05/2010 13:04

ooj I agree with you. Gold is a funny one - I think the fact it has physical form makes people more attached to it than, say, dollar bonds.

Callisto · 04/05/2010 13:03

But the 'gold standard' was itself notional and it was the way it was applied that lengthened the Depression. Ie the Fed wouldn't drop interest rates, rather they increased them to try and stimulate demand for dollars.

ooojimaflip · 04/05/2010 13:02

True.

Original poster
Beachcomber · 04/05/2010 12:55

OK, I guess I mean if we had stuck to the silver standard the the price of gold would not be what it is today.

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ooojimaflip · 04/05/2010 12:45

I don't think you can say it's FALSELY high - it is what it is. It is irrationally high though.

NetworkGuy · 04/05/2010 12:35

"Gold's value is falsely high in modern times"

Same is true for diamonds, but largely because the few areas where they are mined act together to limit supply and keep the price high artifically.

ooojimaflip · 04/05/2010 12:19

Callsito - Lead is real to. Lead is more useful than gold. Our attachment to gold is historical, sentimental and aesthetic. If the economic system ended tomorrow, man would trade initially directly in goods and services in a barter system, and later, providing there was sufficient trade to make it attractive, they would develop ways of storing wealth in order to smooth fluctuations created by things like harvests only happening once a year. That might be gold, it might be something else altogether.

Original poster
Beachcomber · 04/05/2010 12:18

Sure gold is real, for example, countries which clung to the gold standard in the 1930s suffered more in the depression and took longer to recover.

The gold reserves of the world do not even equal the value of the circulation of the US dollar. Gold's value is falsely high in modern times as a legacy of the gold standard is it not? Gold reserves do not represent the buying power of a country any more in any real way.

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