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

[Beachcomber]

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.

You'll also find gold plated contacts in all sorts of things electrical, Riven.

Think the point is that unlike currency, where a government can "print more" leading to suitcases full of cash, only useful for burning for warmth or to boil a kettle, there is always a pretty high value on precious (and these days, not so precious) metals, and keeping hold of quantities of gold is like having insurance.

GB's gold sale forced a "low" in the market and the UK was the loser for it. He won't ever want to talk about it, of course, as it was an error of judgement, and he wants only to be seen as having made "correct" decisions.

Not sure which government introduced PFI but those schemes are costing a shedload of money and while they mean that the initial sum doesn't have to be found, the overall costs (and contract length of 25 years for some) mean that they were poor deals overall, for a short-term saving for the government (ie not having to borrow tens of millions and pay it back over the same 20-odd years).

Ok so so far the only problem seems to be the relatively low price. That just brings me back to the question over if the gold sale has played a part in stabilising inflation then why didn't the Conservatives do it when the price was better?

Seems a bit churlish to blame Brown for selling when he did when they failed to sell at a better time (if the long term benefit is stable inflation).

NetworkGuy - there are far more important, expensive and rarer metals in electronics than gold though aren't there? Why don't we have reserves of lanthanide elements instead? Apart from the fact that China has most of them.

Beachcomber, whether it was or wasn't a mistake, my point was is that it was a one-off, and in my opinion Labour/Brown have done far worse things, economically, on a consistent and continual basis. I'd rather see the focus on that than the gold decision.

PFI - introduced by the Conservatives, embraced by Labour.

Of course there are lots of other issues to examine and debate vesela. I'm just interested in why this gold issue keeps coming up as being a major reason for trashing GB when it appears to be have been a highly complex decision.

I guess I'm kind of challenging the throwing around of overly simplistic accusations made by people who haven't really looked any further into it than I have myself.

I don't claim to know much about this but it often seems like those who keep bringing this up are ignoring the wider context.

Sorry ooojimaflip, not a chemist, or electrical engineer so unfamiliar with all the rarer metals. The "familiarity" with precious metals is because they are also used for jewelry.

Although, for example, titanium is higher in price than some others, I don't know if it is regularly used for cosmetic purposes - it has some ideal properties but perhaps not the attraction of gold, silver, platinum, IYSWIM.

There are no doubt limited (and thus expensive) stocks of other elements, such as Uranium, etc, but we don't "trade" those in the same way, an "exchange" could be fatal!

Yes 'exchange' or uranium are rarely though to end well ;)

re "Why gold as reserve metal?"

Aside from the rarity, gold is an inert metal. That is, it can sit in a vault for hundreds of years and it will not corrode nor decay.

Uranium, on the other hand, has a half-life of some duration I can't remember, meaning it will slowly decay over time, emitting radiation in the meanwhile for good measure.

If anyone knows why Gordon Brown thought it a good idea to convert gold to fiat money at that particular time, I would be interested to hear it.

CoteDAzur - yes Uranium would be a particularly odd choice. You could equall well use any other inert metal though - silver or platinum for instance. We just like gold because it is pretty.

Gold has been used to trade with for millenia - its intrinsic value (more than food or water for eg) is that it is desirable, a status symbol, it is valued universally so you can use it to buy stuff anywhere in the world, it doesn't devalue in times of trouble, it lasts forever, if the world ended tomorrow man would still trade with gold. Last year when the financial markets were in meltdown gold was one of the only 'currencies' that grew. Plus it is real. All of these billions that GB has wasted are notional, the huge debt that he ran up is notional (though we still owe it), there are not actually £10 million pound coins sitting in every bank vault. But gold is real.

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.

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.

"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.

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

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.

True.

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.

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.

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.

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.

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.

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.