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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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TDiddy · 04/05/2010 20:59

Also, I think you have to look at what return he earned from the proceeds in order to measure the true loss. Strictly speaking you should also risk adjust any return for the level of risk taken. Portfolio mgmt is not all about return but also about risk (and liquidity)

whifflegarden · 04/05/2010 21:12

True, Tdiddy/Meg. I suppose my anger and suspicion arises because treasury/GB won't be transparent about this transaction. Really, we don't know...but I'm now on a mission to dig up what info is out there

My second comment was just a rant...not reeaally rooted in fact

TDiddy · 04/05/2010 21:17

Interesting that nuLabour created the Freedom of Info Act but they haven't had credit for it as every now and then they get secretive so although we have moved forward, they look bad for trying to hide things

megcleary · 04/05/2010 21:26

Beachcomber can you accept that there is a question to be asked re selling the Gold?

BeenBeta · 04/05/2010 21:26

One of the theories about why the sale was made is in this blog article.

The theory is that central banks were attemting to hold the world gold price down in the wake of the LTCM debacle.

No idea if true or not.

TDiddy · 04/05/2010 21:51

Seems like the Murdoch press is conveniently ignoring the nice juicy profit that the next Govt will make in a year or two from RBS and LLoyds?

megcleary · 04/05/2010 21:57

Is the profit guarenteed TDiddy?

Original poster
Beachcomber · 04/05/2010 22:14

Megcleary I wholeheartedly accept that there are a lot of questions over the selling of the gold. As I have said before I would like to hear from an impartial economist.

I think you are right that this needs clarifying.

I guess I'm just sick of hearing that GB is a bad incompetent man because Murdoch the slanted press and uninformed readers say so.

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TDiddy · 04/05/2010 22:17

megcleary - Of course not....but you could say that the only question is when not whether if....

Thinking about it, the Govt is the regulator, the govt is the principal shareholder,...the govt sets the competition rules, the govt is the insurer...the govt gets to decide if these banks are insolvent....any such entity is in a unique position to eventaully make profit and should NEVER be declared inolvent. So in this sort of market structure, there is only upside !! I kid you not that the purchase of the banks were very good trades for the tax payer...just ask the previous shareholders and they will tell you that they were wiped out

megcleary · 04/05/2010 22:24

Well I have only started learning some papers have slants (innocent soul) but I have to say I have watched PMQs for a few years and he has never impressed me.

He lies (Hutton Inquiry)

I see from another thread you are on that he is well respected abroad, that really helps us uncover what he is up too here.

I digress, it seems we may have to wait until the Telegraph's FOI request is answered.

We could request MNHQ get an Economist on............

Quattrocento · 04/05/2010 22:27

I used tp think that GB was incompetent in many respects - and selling the gold is an example of his incompetence (wrong time, preannouncing it etc). He could have doubled our money by waiting for three months and not preannouncing.

But the investment in the banks was a stroke of real genius in the face of popular opposition. It had to be done, but it is going to make money as well.

TDiddy · 04/05/2010 22:32

Quattrocento- Brown was born to be Chancellor not PM; is his problem. Wonder whether he longs to be a DC, TB, NC like figure but never was , never will be. Wonder what his political epitaph will be.

florenceuk · 04/05/2010 22:32

This reply has been deleted

Message withdrawn

ooojimaflip · 04/05/2010 23:36

I hadn't realised we were only talking about £7 billion. Really against a budget deficit of £162.4 billion we really need to just get the fuck over it.

TDiddy · 04/05/2010 23:46

ooojimaflip agreed + the tens of Bn that the tax payer will make when we sell the banks, to repeat myself

ooojimaflip · 04/05/2010 23:51

Aye we are going to do well out of the banks. Probably not well enough to get us out of our current hole though

TDiddy · 05/05/2010 00:01

remind me how much the hole is? I think the taxpayer makes 1BN for every 1p rise in RBS shareprice. Share price could double in a couple of years and yield another 60BN and that excludes Lloyds.

Acutally bank recovery will benefit the taxpayer enormously!! Priobably the best way to get us out of the hole! Politically sensitive to try explaining this to voters though

ooojimaflip · 05/05/2010 00:13

Aye, but we are over spending 80-160 bn a YEAR. 60 bn very welcome but doesn't fix problem

Kewcumber · 05/05/2010 00:16

Netwrokguy "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 want to be pedantic (what a lie! ) but technically its one company which does this - The DeBeers Trading Company does this by "marketing" damonds of the majority of the worlds producers, they control supply to the market and everyone they buy fom has to agree to supply what they say (more or less) whch keeps the price of diamonds stable. Their argument is that prior to doing this diamond prices fluctuated wildly depending on the supply of individual pipes and that no-one wants a diamond to fluctuate on price so they are doing the world a favour... MInd you for various reasons they only now control about 40% by value of rough diamond trade.

As a result they are banned from the USA as they contravene the US antitrust laws., though this may have been lifted following the recent court case .

OK as you were...

ooojimaflip · 05/05/2010 08:04

DeBeers only control natural diamonds which are another thing we only agree are valuable because they are pretty and we always have agreed they were pretty. Synthetic diamonds are as good or better for useful applications.

Original poster
Beachcomber · 05/05/2010 08:11

As florence points out, other countries sold gold at the same time. I'm pretty sure both the Swiss and the Belgians sold at this time. Thanks for the link, am off to read now.

I would be interested to have the numbers explained to me. For example when people say he lost us X billion are they taking into account the return on the currency reserves investment?

Also what was the exchange rate at the time he bought/sold and what would it have been if he had done it when gold was at a higher price?

I disagree with you TDiddy when you say that GB was not born to be PM. I just think he is PM at a time that is not on his side; the press has decided they want a change, Labour has been in power for so long that the population want a change, a global recession happened, the country needed a lot of money spent on it to sort out the NHS etc.

I think what most goes against Mr Brown is that he is an old school politician. He has moral conviction in a day and age when a fake tan and a spin doctor will serve one's personal ambition much much better.

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MmeLindt · 05/05/2010 09:24

I agree Beachcomber, with your comments about GB. He was PM several years too late, and that is slimy Tony's fault.

I asked DH last night and he said that most countries sold gold at the same time. He is German and says there has been no controversy there about the selling of gold.

What it boils down to is this:

How much gold was sold, to which price.

Which investments were made with the money made?

How have those investments panned out (taking into account that the £ gained against the dollar since the gold was sold)

What is the net difference?

Surely someone has worked this out before now?

megcleary · 05/05/2010 09:44

GB on five live now shall we copy and paste the thread and see what he says????

Kewcumber · 05/05/2010 11:40

ooja - yes they do and they have even managed tofind a way to "brand" their own diamonds (they also have a few mines) - Imean brand themphysically. Presumably to convince people that De Beers diamonds are somehow more diamondy than your average runof the milldiamond. Or you could just use the 4 C's...

Original poster
Beachcomber · 05/05/2010 11:43

Ah but MmeLindt you just used more than one sentence to talk about a complex issue there and you asked questions.

Most people just want sound-bites and snappy stuff they can trot out.

When I started this thread I honestly thought that I would have loads of Mr Brown's critics who would come and explain why they personally saw the gold sale as something to be holding against GB ten years later.

I hope history will be kinder to this man than the people he has done so much for are being.

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