...... about the state of the country's finances. When these sort of images are released, presumably to bolster confidence, I do worry:

http://www.dailymail.co.uk/news/article ... ondon.html

...... about the state of the country's finances. When these sort of images are released, presumably to bolster confidence, I do worry:

http://www.dailymail.co.uk/news/article ... ondon.html

The line about selling off the gold has been overplayed by some of the tabloids as an easy way to bash Brown.

He did get a bad deal by selling at the bottom of a market that subsequently rose but the UK wasn't alone in diversifying its reserves at that time. Australia, Canada, Switzerland, France all lost out by selling gold at that time, I think Switzerland and Canada sold a lot more than we did. When the tabloids claim that Brown lost £xbn on the gold they are just comparing the value of the gold then with the value of the gold at its peak a decade later, without adjusting it for the fact that when the gold was sold it was invested in other interest bearing assets so to actually find the net value of that decision is far more complicated (probably still a net loss, but a much smaller one).

At the time the prevailing economic thought was that it was a historic anachronism to keep such a large portion of a country's reserves in gold, a throwback from the war and the Cold War era where people feared that there would be another world war and gold was at least something tangible if large scale industry and production was destroyed. So a lot of countries were diversifying their assets from gold into other things and we were one of them.

Interestingly on this I once heard Ken Clarke interviewed about this and the interviewer asked him about Brown's decision to sell the gold presumably wanting Clarke to stick the boot in and he said he could never understand why we hoarded so much gold and he kept trying to persuade the Treasury to sell it when he was Chancellor but he said the mandarins in the Treasury seemed to have a nostalgic attachment to gold so he never got round to it. Brown obviously did...and at the worst time. But it was not as bad a decision as people have made out.

http://www.ft.com/cms/s/0/5788dbac-7680 ... z1lJyIfv1E

The line about selling off the gold has been overplayed by some of the tabloids as an easy way to bash Brown.

He did get a bad deal by selling at the bottom of a market that subsequently rose but the UK wasn't alone in diversifying its reserves at that time. Australia, Canada, Switzerland, France all lost out by selling gold at that time, I think Switzerland and Canada sold a lot more than we did. When the tabloids claim that Brown lost £xbn on the gold they are just comparing the value of the gold then with the value of the gold at its peak a decade later, without adjusting it for the fact that when the gold was sold it was invested in other interest bearing assets so to actually find the net value of that decision is far more complicated (probably still a net loss, but a much smaller one).

At the time the prevailing economic thought was that it was a historic anachronism to keep such a large portion of a country's reserves in gold, a throwback from the war and the Cold War era where people feared that there would be another world war and gold was at least something tangible if large scale industry and production was destroyed. So a lot of countries were diversifying their assets from gold into other things and we were one of them.

Interestingly on this I once heard Ken Clarke interviewed about this and the interviewer asked him about Brown's decision to sell the gold presumably wanting Clarke to stick the boot in and he said he could never understand why we hoarded so much gold and he kept trying to persuade the Treasury to sell it when he was Chancellor but he said the mandarins in the Treasury seemed to have a nostalgic attachment to gold so he never got round to it. Brown obviously did...and at the worst time. But it was not as bad a decision as people have made out.

http://www.ft.com/cms/s/0/5788dbac-7680 ... z1lJyIfv1E