Unhappy anniversary. Ten years ago the Chancellor of the day was congratulating himself audibly on a job well done, and in the vaults of the Bank of England grumpy porters were sticking labels on the ingots to indicate a change of ownership.
This was Gordon Brown’s great clearance sale. He had chosen to auction more than half the nation’s gold reserves — a matter of 395 metric tonnes out of a holding of 715 tonnes — and to take payment in paper money, at the lowest price available for two decades. The gold was sold for $3.5 billion in 17 auctions between July 1999 and March 2002 at an average price of $275 an ounce. As we went to press it was worth around $1,125 an ounce. Sellers sometimes can’t be choosers, but this was no fire sale. It was an unforced error, billed as a masterly initiative.
Everybody knew that gold was out of date, and Modern Portfolio Theory had now proved it.
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