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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 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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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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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.

florenceuk · 04/05/2010 15:01

This reply has been deleted

Message withdrawn

florenceuk · 04/05/2010 15:04

This reply has been deleted

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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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Original poster

Beachcomber · 04/05/2010 15:18

That's interesting florence, thanks.

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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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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?

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.

said · 04/05/2010 19:11

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

MintHumbug · 04/05/2010 19:17

This reply has been deleted

Message withdrawn at poster's request.

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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BeenBeta · 04/05/2010 19:39

MintHumbug - yes the price was driven even lower than it would otherwise have been by the pre announcement.

Beachcomber - yes the Treasury objectives were probably political the traders objectives were economic.

megcleary · 04/05/2010 19:46

I would just like him to explain why he did it in simple terms I can understand.
All we can do is speculate, awaits his autobiography!

MmeLindt · 04/05/2010 19:55

The pound was at around $1.40 in 1992 and had risen to almost $2 in 2004, weakened a bit after that due to the global recession.

If he put the money into $, did he not make a lot of money for the treasury?

vesela · 04/05/2010 20:09

Beachcomber - imo not that he didn't handle the recession well, or that he was single-handledly responsible (although he bears some responsibility), but the fact that he spent so much during the good times in an ineffective way. What was achieved (although I'm not saying it was nothing) doesn't match up with what was spent.

but that's OT from gold, which is interesting question - thanks.

Habbibu · 04/05/2010 20:16

Thanks for this thread, Beachcomber - really interesting. More threads like this would be great!

Original poster

Beachcomber · 04/05/2010 20:20

Fair point vesela. There are many who think that he spent so much in thoroughly effective ways and that so much needing spending to haul back some semblance of a Welfare State for the UK.

Like you, I don't want to send this thread off on other discussions, interesting though they could well be.

I just want to get to the bottom of this 'he sold our gold' accusation which just sounds like media bullshit to me.

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megcleary · 04/05/2010 20:40

He did sell the gold, we don't know why all we say will be speculation which is as good as it gets as he has not answered.

It maybe the investments made with the money obtained are doing will and hindsight says gold would have done better, but we will never know.

Am off to google the Freedom of Information Act to find some bloody answers!

whifflegarden · 04/05/2010 20:47

Unfortunately no one knows (except for GB's small circle involved in the decision) what really happened because Treasury has blocked (yes you read right), blocked the release of information pertaining to the sale

Read here about how this decision has cost this country £7bn.

Other than that, I agree with Vesela

whifflegarden · 04/05/2010 20:49

Meg part of the reason we have such an astronomical deficit is because he didn't make investments. He spent, spent, spent. If he was my financial manager I would have sacked him.

megcleary · 04/05/2010 20:54

I see some bright sparks nicked my FOI idea......
WG Earlier posters claimed he bought Yen, Euro & Dollers,
as I have bleated all along I do agree we may never know....
Which hacks me off no end

TDiddy · 04/05/2010 20:55

Will you all give him credit when he makes tens of BNs from the purchase of RBS and Lloyds as IMO he is on track to do

Original poster

Beachcomber · 04/05/2010 20:58

I've already read stuff from the Telegraph. I would like to read an impartial analysis from an economist and not the slanted view of a Conservative supporting journo.

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