What happened to Brown’s Gold?


5:08 pm - February 20th 2010

by Left Outside    


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In 1999 Brown as Chancellor of the Exchequer sold 400 tons of gold at the bottom of a 20 year slump in the gold market. He sold at $275 an ounce and could get closer to $700 now.

Conservative Home’s Left Watch argue that, by being patient and waiting for the price of gold to more or less triple, the French have made 50% more than Gordon Brown on gold sales having only to sell half as much.

Tim Montgomerie asks “Is there a more powerful example of Brown’s incompetence?”

When it comes to the matter of how the Gold was sold I think that is fair comment, it really does seem that Brown didn’t know how to best sell gold – and more damningly – didn’t try to find out the best way either.

By announcing the sale in advance it is reckoned that he depressed the market by around 10%. Record numbers of investors took up “short” positions on Gold in anticipation of the sale.

By way of illustration, whereas he sold gold through auctions Australia and Switzerland sold through the normal and more profitable channels and then announced the sales after they had taken place.

But the decision to sell the gold in 1999 seems far more difficult to judge than is often presented.

When it comes to partisan point scoring it seems Tim leaves his pro-market credentials at the door. Even Guido Fawkes cannot help himself lamenting the “billions lost” by Brown.

There are a number of caveats on Brown’ bungling so rarely mentioned some would think that they didn’t exist. Robert Peston points out that we didn’t just ditch gold, we purchased interest-bearing assets instead.

The $3.5bn of revenue raised in the sales was invested in interest-bearing assets denominated in dollars, euros and yen to the extent of 40%, 40% and 20% respectively.

So to calculate the true net loss to the taxpayer, I would have to adjust for the yield on these assets and movements in the value of those currencies. And I don’t have enough information on precisely what was bought and when to make that calculation.

It is probable, however, that the effective net loss on Gordon Brown’s great gold sale would be a bit less than $9bn – but it would still be a very significant loss.

So a poor defence for Brown, but a defence nonetheless. Brown’s logic was that Gold would not recover in value to the extent that it would out earn these assets.

He was wrong, but if Tim Montgomerie and Guido Fawkes knew Gold was to triple in value in a decade why do they not live in houses made out of it?

Its very difficult to beat the market and utterly impossible to assimilate all the information needed to do so on a consistent and intentional basis.

Brown did a marvellous job of making as little money in a weak market as he could, but its a little disingenuous to suggest Brown has lost us billions of pounds.

This behaviour seems to have little to do with an interest in the best practice of Government or deeply held beliefs but a great deal to do with political gesturing.

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About the author
Left Outside is a regular contributor to LC. He blogs here and tweets here. From October 2010 to September 2012 he is reading for an MSc in Global History at the London School of Economics and will be one of those metropolitan elite you read so much about.
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Reader comments


it’s a little disingenuous to suggest Brown has lost us billions of pounds

No it isn’t.

You have very fairly established that yourself. Not 9 billion perhaps, but billions nonetheless.

Funny how Conservatives never want to talk about the Billons and billions they lost in the great privatisation swindle. Huge amounts of assets and land were flogged off at knock down prices to their mates in the private sector. This was rammed through based solely on dogma, and in some cases a rigged market to encourage share ownership.

What is more the public is still being fleeced blind by the privatised gas and electricity companies who have been gouging their customers for years. All in the name of so called share ownership. Dick Turpin at least wore a mask.

Or how about the billions the toies wasted by squandering north sea oil. Once again state assets given away to private companies. Talk about the ‘something for nothing society.’ I would go as far as saying that it is not unfair to call some of these actions were carried out by traitors.

“lost” is such a strange term, as if anyone is meant to see a decade in to the future for all possible economic situations and act on them ahead of time.

Did Brown make, in retrospect, the right decision? Clearly not. Would the Tories (and other critics of Brown on this issue) be saying that Brown was an economic genius on the selling of gold then if the interest bearing assets had worked out better? I would posit they would not take up the opposite stance in that situation, quite hypocritically.

Brown didn’t “lose” much of anything at the time, he made a decision that in the short term was to our benefit. All Chancellors can do, of any party or persuasion, is make informed decisions. The worst that can be said of Brown is that as a relative rookie he didn’t quite get the *practice* of selling Gold right.

Otherwise let’s revisit this issue in 20 years time when Gold is hypothetically even less valuable than it was in 1999 and hail Brown as the masterful economist he was…

Its very difficult to beat the market and utterly impossible to assimilate all the information needed to do so on a consistent and intentional basis.

Glad to see the Efficient Market Hypothesis is alive and well on the left!

Talking about Tory losses, lets not forget the ERM crisis and Black Wednesday. That cost a few quid. We did worse than Italy.

Hey,

At the TPA, we ran the numbers to find out the size of the loss, taking account of the investment in interest-bearing foreign currency assets:
http://www.taxpayersalliance.com/goldsale.pdf

The loss is less than $9 billion as Mr. Peston says, it’s £5 billion. Of course, it is difficult to beat the market, but the Gold Sale is still a pretty disastrous example of financial management. My understanding is that in the industry the time of the sale is known as the “Brown Bottom”.

Hope that’s helpful.

Best,
Matt

7. J Alfred Prufrock

@6

The “taxpayers alliance” is a cabal of right-wing Tories, ergo very biased. Sorry if that offends.

In the interests of balance: http://www.taxpayersalliance.org/ (and they have the better domain name too :P)

@matthewsinclair

Thanks.

Interesting chart of the Gold price since 1980 in your link. Seems like gold had been on a long-term decline since 1980, and had rarely been above $400 since then.

Do you think that Brown should’ve predicted the massive rise in the price of gold?

On a related topic of predicting the future, do you think bankers should’ve predicted that eventually people would realise mortgages owned by jobless Americans with no qualifications were worthless? Would’ve saved trillions if they had foresight. That’s where the TPA ought to be looking to achieve your mission of low taxes and spending as that is where most of our debt increase has come
from

If the cheap sell off of gold had been the exception to the rule of Brown being a competent Chancellor then I’m sure the public may have overlooked his blunder.

Unfortunately this wasn’t the case. It was part of a series of mistakes which have left this country on the brink of financial ruin and exposed Brown as the fraud he is.

Its a fair point about the reinvestment into other assets though.

“Brown did a marvellous job of making as little money in a weak market as he could, but its a little disingenuous to suggest Brown has lost us billions of pounds.”

I’m not quite sure that follows from your article. The main point seems to be that Brown lost slightly fewer billions than previously thought. This doesn’t strike me as a marvelous job – just a slightly less dreadful one than previously thought. Completely agree re: political gesturing. 9 billion – although it seems strange to say it – isn’t that much. Ish.

Announcing the sales to the market as gold auctions was clearly a mistake. However, how would the British media have reacted if the government had conducted silent sales as other governments did and only told the media after the sales? I suspect those who call for transparency would have been outraged.

So what if gold has increased in value since. None of us would sell anything if we were held to the standard ‘ it might be worth more next year ‘. Using that standard there would never be a right time to sell. Gold is just a reserve that sits in a vault doing precisely nothing and yielding zero. If the gold auctions had not taken place. Would we now be selling the reserves and disbursing the appreciated proceeds to the population? No, they would still be sitting in a vault doing precisely nothing and yielding zero because they are reserves. Gold only exists as a central bank reserve as an unhedged net reserve. The difference between foreign currency liabilities and gross reserves. Without the auctions all that would happen is the numbers in the Exchange Equalisation Account would be bigger. The idea that the taxpayer would be better off is merely an accounting entry.

The main reason gold reserves were transferred into foreign currency was to buy euros in order to support the single currency.

£9 billion? If that were only the full extent I could almost live with it (Remember people reckon Black Wednesday cost £3bn, Brown’s Gold misjudgement is on that scale).

Personally I’m more concerned about the forecast £70bn+ we’re going to be spending in a few years time on debt interest. Almost half of your income tax will be going on debt interest. As a reminder, that is NOT welfare payments, NOT doctors, NOT nurses, NOT police, NOT hospitals… I could go on. In four or five years time, when you ask why Britain’s public services are underfunded, I’ll point you to our debt payment figure. THAT is Brown’s true failing.

What a shame Osborne and Co gave in and decided to say they’d match Labour’s spending. The only conclusion from that is that debt would be destroying our public services whichever party had been in. And THAT is their great failing.

“On a related topic of predicting the future, do you think bankers should’ve predicted that eventually people would realise mortgages owned by jobless Americans with no qualifications were worthless?”

Why would they bother? All they had to do was correctly predict that their friends in Government would bail them out when they fucked up. Moral hazard strikes again.

Reverting to the thread topic, I think it highly unlikely that GB would have taken the decision to sell the gold from the reserves without advice at the time from Treasury officials and the chief economic adviser. Of course, the Chancellor was the responsible minister but I think we should know what advice was given.

@14
This is an important point, often missed. Governments of all sorts are found wanting in so many similar ways. The comon thread is the civil service. Should we consider replacing them with each new administration or do they simply require better scrutiny?

16. Alisdair Cameron

@ sally

Conservatives never want to talk about the Billons and billions they lost in the great privatisation swindle

Aye, but that’s not exactly ground upon which New labour can campaign, is it: with their penchant for PFI and out-sourcing in every area of public services, they’ve privatised every bit as much as the tories, just less openly,more deceitfully. As I’ve often said, Thatcherite Tories were bastards to your face. New labour are bastards behind your back.

17. the a&e charge nurse

[16] “they’ve privatised every bit as much as the tories, just less openly,more deceitfully” – indeed, I’ve heard it said that the Tories have watched almost slacked jawed, at the extent of covert privatisation ushered in by NuLab.

Had the Tories attempted comparable levels of privatisation in the NHS, say, (ISTCs, PFIs, Out of Hours, domestic/cleaning services, management consultancy, IT, etc, etc) then there might have been far greater opposition?

Not one shred of evidence has ever been offered (despite BILLIONS in expenditure) that standards offered by private providers are either more cost effective, or indeed of a higher clinical standard – quite the contrary in, fact, if we look a some of the data dug up by Allyson Pollock, non-NHS providers seem to be MORE expensive, and clinically less competent.

According to Pollock;
“NHS money, services, staff and patients are being diverted into the private sector on a grand scale. The focus on quality means that population access and fair distribution are being lost as core values and these areas of public accountability removed from government oversight and public scrutiny. Isn’t it time the CQC got to work examining the £5bn ISTC programme; the £12bn IT programme; the £14bn annual pharmaceutical budget and the £12.2bn PFI hospital programme, which will cost the taxpayer and NHS in excess of £70bn over the next 30 years? It is these resource flows out of the health service that will ultimately have the most impact on distribution of services, on patients’ access to care and on the core principles of the NHS”.
http://www.guardian.co.uk/commentisfree/2009/oct/15/nhs-private-treatment-centres

Brown may have taken a punt in a market that was always going to involve some degree of risk, but in other spheres NuLab obsession with the market is costing the public both quality and cash.

13. This ignores the ignorance of the bubble and the motivation of greed. If you think bankers and investors ever thought that the market was going to collapse like it did and that they’d be ok because of a bail out, then I would suggest you’re giving them too much credit.

@15: “The common thread is the civil service. Should we consider replacing them with each new administration or do they simply require better scrutiny?”

Years into the New Labour government, it was widely claimed that the government was steadily politicising the civil service.

The number of “SPADs” – special advisers – was soon doubled compared with the number in John Major’s government. Blair brought Jonathan Powell and Alastair Campbell into Downing St from outside the civil service and they were given special authority to issue instructions to career civil servants. Half the chief information officers in government departments were pushed out and replaced, mainly by journalists reportedly sympathetic to the New Labour cause.

Gordon Brown installed Ed Balls in the Treasury as Chief Economic Adviser until he resigned to become the MP for Normanton, W Yorkshire, in 2005 – the Normanton constituency is next door his wife’s constituency, Pontefract. Recall, too, what happened with Charlie Whelan, who had been made Brown’s official spokesman in the Treasury until he found it necessary to resign in 1999:
http://en.wikipedia.org/wiki/Charlie_Whelan

Compare that with John Major, whose first press secretary when he was PM was Gus O’Donnell, a career civil servant, who is now head of the civil service and secretary to the Cabinet.

From experience, the civil service has a deep tradition of political neutrality and does “speak truth unto power”, which some politicians find objectionable. Getting into the First Division of the civil service depends on degree results with interviews, and then annual staff appraisals, so there are lots of articulate bright people around, who make very dispassionate judgements about ministers and policy proposals. I can recall a circular minute from one permanent secretary with warnings about dealing with one named special adviser.

Contrary to popular myth, the civil service is not monolithic. Even government departments are not internally monolithic: argued dissent is treated on its intellectual merits. A premium is put on “evidence-based” policy. There are many internal checks and balances on proposals to spend money – try this on ROAME statements:
http://www.meti.go.jp/english/information/data/cM99809e.html

Also contrary to political myth, the civil service is not all ensconced in London. The last figures I saw from some years back showed only 18% of the civil service as working in London, with only 12% working in central London. I’ve little doubt that those figures are lower now after all the outposting to the regions, especially of Department of Health staff to Leeds and Office of National Statistics staff to Wales. This is the latest that I can find on staff numbers in the civil service:
http://www.civilservant.org.uk/numbers.pdf

Whether it was civil servants or Brown himself that made the call, the reality is the same…no-one can work out what the market will do 10 years in the future unless the market already knows what is going to happen then. It’s my understanding that, for all intents and purposes, the market was saying Gold was at a stable low with no foreseeable rise, certainly not of the degree that has been seen.

No-one with any seriousness can question Brown (or his team) on anything but two factors…how they announced and practiced their desires on selling the Gold, and whether or not it is “right” for a country to get rid of their assets on a longer term risk reward strategy.

Selling the gold was obviously a bad decision but the incompetence of Browns handling of the economy has been demonstrated quite clearly in a lot of other ways.

Brown has ignored the basic economic fundamentals, probably deliberately in order to seek political power. For me the choice is really is Brown economically incompetent or was it just deliberate. ie he took high risks with the uk economy for power.

Take one example. Brown had a golden rule of his economic mgt not to spend more than was coming in in taxes over the economic cycle. He kept to this initially and gain plaudits for it. But then after a couple of years started spending tax payers money like their was no tomorrow and without the wealth to back it up. Made worse by the fact the economy was growing at an artificially high rate based on more and more consumer credit.

By 2004 he was being warned that he was breaking his own golden rule. And later the eu leaders pulled him up for breaking the stability pact rules when he was running close to 3% deficits in the “good” yrs.

Interesting before the current economic crisis he put in place a much tighter spending round (the 3yr spending review) but only after he had his hands on the keys to 10 Downing Street.

All in all including PFI and unfunded public sector pension UK debt was more than 100% of GDP before the crisis.

The dodgy activity of spending money and not putting the debt of pfi on the books is now being closed by international accounting rules. Anyone can spend money we do not have.

So it is very difficult to say that Brown did not deliberately put the uk economy in a high risk position that was alway likely to fail when a economic ill wind blew.

You could replicate this argument for many other areas of economic policy. Like making the excellent decision to make the BOE independent and take control of monetary policy but then change the inflation rate to cpi which does not include asset price inflation eg house prices. Nor did he put in place any concept of control of the money supply ie the growth in credit. This is unlike the EU central bank that does take into account such things.

As such building an economy on uncontrolled credit, more and more debt and uncontrolled house price inflation was economically suicidal. The guy he had in charge of this policy Eddie George admitted that the way Brown and him ran the economy on more and more debt was never sustainable.

So again Brown knew that he was growing the economy in a way that was always going to end in tears. And with the global ill wind the uk economy has fallen like a house of cards.

The IFS was warnings of fiscal black holes back in 2001, as reported here:
http://news.bbc.co.uk/vote2001/hi/english/newsid_1323000/1323054.stm

Charles Goodhart was warning of the house-price bubble in 2002, as reported here:
http://www.telegraph.co.uk/finance/economics/2758979/Goodhart-warns-on-house-price-boom.html

Warren Buffett was warning in 2003 of the risks inherent in derivatives trading:
http://news.bbc.co.uk/1/hi/business/2817995.stm

All those warnings were all ignored.

The risk of appointing partisan advisers in the civil service, especially in Downing St and the Treasury, is that ministers will get told what they want to hear.

Those who followed the testimony to the Hutton inquiry on the circumstances leading to the death of David Kelly will easily pick up on the huge influence Alastair Campbell had on the drafting of that infamous dossier on Iraq’s weapons of mass destruction, which was published at a special session of Parliament on 24 September 2002. This was the dossier which claimed four times that Iraq could use the weapons within 45-minutes of a command from Saddam Hussein. After the invasion on 20 March 2003, no such weapons were found. What’s arguably even worse is that British troops were sent out to Iraq without the equipment needed to protect against use of WMD.

Selling the gold was obviously a bad decision but the incompetence of Browns handling of the economy has been demonstrated quite clearly in a lot of other ways.

Yeah, there’s lots that Brown’s done which is bad but you have totally ducked what this post is about and have almost C&Ved a missive slagging of Brown’s handling of the economy.

Why was it obviously wrong? Remember! No hindsight, look at the working paper provided by Matthew Sinclair, does the spike in gold prices over the last 10 years look like something you predicted?

If it was such a bad idea him selling it, why weren’t you the one buying it??

. Matthew Sinclair

Hey,

‘ At the TPA, we ran the numbers to find out the size of the loss, taking account of the investment in interest-bearing foreign currency assets:
http://www.taxpayersalliance.com/goldsale.pdf

The loss is less than $9 billion as Mr. Peston says, it’s £5 billion. Of course, it is difficult to beat the market, but the Gold Sale is still a pretty disastrous example of financial management. My understanding is that in the industry the time of the sale is known as the “Brown Bottom”. ‘

Hope that’s helpful.

Best,
Matt

A 2-year Treasury is a T-Note not a bond. A bond has a maturity above ten years.

Why did you do your calculation/guessimate based on the yield from 2-year securities when 10-year is the benchmark security? Was it because the 2-year yields less than the 10-year and that would help to emphasise what ever point you were trying to make? Not very honest or accurate in my opinion. In your calculation did you reinvest coupon payments for a yield, or just calculate ten years of yield and add them to the total?

Should be calculate the proceeds of the BP, BAA, BG, BA, Rolls Royce etc sales and mark-to-market present day capitalisations and say the difference between the two is a loss to the taxpayer. That would be as absurd as saying gold sales were a loss to the taxpayer.

#23. Left Outside

“Tim Montgomerie asks “Is there a more powerful example of Brown’s incompetence?”

I was responding more to the quote above that to me Brown incompetence is far better displayed by his management of the economy rather than his decision to sell gold.

Although you have to ask why he bothered to sell gold at that time. While I think I have a broad understanding of the economy I have no knowledge of the buying or selling of gold as a commodity and therefore cannot judge the decision without hindsight, in the way it was easy to do with his general management of the economy.

The only thing I would point to is why did he sell it and why at that time. With the end of the stock market boom with the dot com bubble in the 90s and the euro weakness after its launch it probably was predictable that commodities like gold could do quite well. (buying a lot of the weak euro may have been a good idea).

#22 Bob – Makes some good points.

“The risk of appointing partisan advisers in the civil service, especially in Downing St and the Treasury, is that ministers will get told what they want to hear.”

An example of this type of thing is when Brown set up the FSA removing responsibility for the financial regulation from the BOE. They put Turner a labour supporter as its head. Turner belatedly turned on them when he pointed out Brown and Blair had warned the FSA off from investigating some dodgy activity in the financial sector ie the banks.

A simple questin for all these gold experts is: britain has about 300t of gold left, should it increase the size of those reserves buy buying more, decrease them by selling more or leave them the same? And if the latter should they ever buy or sell? As an asset which is clearly so easy to predict the price movements this should be quite straightforward.

@25: “They put Turner a labour supporter as its head.”

Turner was previously a Director General of the CBI. He has a first class economics degree from Cambridge where he was a leading light in the Conservative students association. Turner was NOT the original top honcho of the FSA – he was only appointed chairman in September 2008.

FWIW my opinion is that in splitting off the financial market supervisory and regulatory functions from the Bank of England in 1997, the government was concerned to avoid concentrating too much power within the ambit of the Bank of England, which had been made “independent” and handed the remit of managing monetary policy so as to maintain an inflation target.

Before then, interest rate decisions had effectively been made by the Chancellor, in consultation with the Governor of the Bank, although inflation targeting had been (sensibly) introduced by Norman Lamont, when he was Chancellor, on the advice of Alan Budd, who was the chief economic adviser in the Treasury prior to Ed Balls. Mervyn King, the current governor, has explicitly said that he doesn’t want to have back the financial market supervisory and regulatory functions.

Hugh Dalton reports in his autobiography that when the Attlee government came to nationalise the Bank of England in 1946 – it was previously in private ownership – the Conservatives in opposition opposed this. However, Churchill, as leader of the opposition, absented himself from the debates because he privately agreed with the government. As Chancellor in the mid 1920s, Churchill had been embarrassed by having to rely on press reports for information about the Bank’s decisions on interest rates and monetary policy.

If we are going to make these kind of judgements on Brown then I think we should also take into account the decisions he got right. Has everyone forgotten the auction for 3G mobile phone licences in 2000 (the first time anything like this had been tried) that raised an astonishing £22bn? Beautiful timing, cashing in on the dotcom hype. Probably luck, but then wasn’t the gold sale just bad luck?

What Brown deserves to be castigated for is running a big deficit even through an economic boom. How was that ever supposed to work?

11:44 pm, February 21, 2010
27. Bob B

‘ Hugh Dalton reports in his autobiography that when the Attlee government came to nationalise the Bank of England in 1946 – it was previously in private ownership – the Conservatives in opposition opposed this. However, Churchill, as leader of the opposition, absented himself from the debates because he privately agreed with the government. As Chancellor in the mid 1920s, Churchill had been embarrassed by having to rely on press reports for information about the Bank’s decisions on interest rates and monetary policy. ‘

Churchill had bad experiences with the bank so was probably delighted that they were being nationalised. It was the governor, Montagu Norman who convinced Churchill in 1925 to put sterling back on the gold standard at the 1913 exchange rate. A ludicrous overvaluation. The result was even higher unemployment, falling wages and a general strike. Churchill as Chancellor got the blame from Keynes and others but the governor was behind the decision. The former editor of the Telegraph, Peregrine Worsthome is his stepson. A question remains unresolved why during his tenure at the bank and as a director of the Bank for International Settlements in 1939, 6 million sterling of Czechoslovakian gold was transferred from the Bank of England vaults where it was in safe keeping to the Nazis. Peregrine Worsthome the former editor of the Telegraph is his stepson.

Of course, it is always possible to change a name plate on a building from “Financial Services Authority” to “Bank of England”, change the website accordingly and reprint all the office stationery and literature. The chairman or CEO of the FSA could be appointed a Deputy Governor of the Bank of England.

Granted that would probably boost George Osborne’s ego a bit – if that’s still feasible – but I’m not sure what else it would achieve.

Richard: “Montagu Norman who convinced Churchill in 1925 to put sterling back on the gold standard at the 1913 exchange rate. A ludicrous overvaluation.”

By reports, before making a final decision on returning to the Gold Standard in 1925 at the pre-war parity, Churchill held a dinner party at 11 Downing St, the traditional official home of Chancellors in office. Attending the dinner party were Montagu Norman, Keynes and Reginald McKenna, Chancellor in Asquith’s government before WW1:
http://en.wikipedia.org/wiki/Reginald_McKenna

Keynes was against but the other two were in favour, as was the mainstream orthodoxy coming from the City lobby. Even so, Churchill is reported to have held personal doubts but went along with what was taken as the weight of conventional, informed opinion as well as the majority view at the dinner party.

What’s especially interesting about this is that Churchill went out to seek divergent opinions before making a decision as Chancellor and this was not the only occasion Churchill did that. As wartime PM, he kept around him as scientific advisers Frederick Lindemann (Viscount Cherwell) as well as the greatly junior RV Jones, despite the fact that they regularly disagreed about many crucial technical issues relating to both Britain’s and German defence and weapon systems. Churchill wanted to listen to informed debates between rated experts who held divergent opinions – on this, see Prof RV Jones’s book: Most Secret War (1978).

And btw Churchill is the source of that regular standing joke about economists having different opinions along the lines of that whenever he asked five leading economists for their views on an issue, he got back six different answers, including two from Lord Keynes.

Dan @4.

Yes, I was going to say the same thing. What amuses is not just that rediscovery of the EMH from first principles but the way in which absolutely no one has picked up on it.

We’ll be back to how the EMH led the entire financial system over a cliff in a day or two without anyone noting that it’s not an ideological position at all, it’s simply a statement about the universe we inhabit.

“Yes, I was going to say the same thing. What amuses is not just that rediscovery of the EMH from first principles but the way in which absolutely no one has picked up on it.”

What does that mean? I’ve always argued that the Right is confused over gold sales in that it seems to think gold was guaranteed to go up, yet all the market information we have says the opposite. As have many others.

“Its very difficult to beat the market and utterly impossible to assimilate all the information needed to do so on a consistent and intentional basis.”

That’s what the EMH says. Markets efficiently process the information about what prices should be in said markets. Thus, unless you’ve got new information not available to the market you cannot beat it over time……well, other than being a statistical outlier as far as luck is concerned.

Yes, but I don’t think it’s the average reader of LC who is claiming the EMH doesn’t apply to gold – that’s the Spectator and the Telegraph and so on…

The fuss made by Tories over the Gold sale brings to mind an image of thousands of seething Scrooge McDucks jealously crouched over their tiny hoard of sparkling Gold coins.

Very sad.

If the author has gold to sell at $700 per ounce now, I would be happy to buy.

We sold half of our gold reserves – nearly 400 tons – when the price was around US$275 per ounce, that is true, but the market price of gold is currently over $1,100 per ounce, and has been over $700 per ounce since late 2007 (it dipped to just over $700 in late 2008).

This article seems to be mixing up the price of gold in US dollars with the price in pounds sterling. $1,100 per ounce translates at about £700 per ounce. (The sterling price in 1999-2002 was generally under £200 per ounce)

38. Public School Lefty

an image of thousands of seething Scrooge McDucks jealously crouched over their tiny hoard of sparkling Gold coins.

Was Scrooge a son of the Manse I wonder ?

Fraudie Broon has done immense damage to the Scots’ reputation as a canny breed in respect of all things financial.

But then look at the Darien expedition and John Law.

Another Jock loser then.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    What happened to Brown's Gold? http://bit.ly/9kvHNu

  2. Left Outside

    RT @libcon What happened to Brown’s Gold? http://bit.ly/bMAh9a

  3. James Emery

    Liberal Conspiracy » What happened to Brown's Gold? http://bit.ly/9jtgF2

  4. Brown, gold and mismanaging Britain’s Assets « Freethinking Economist

    [...] the subject (hat tip LeftOutside). But I think LO’s attempt at a defence – continued on LibCon – does not go far enough. Sure, the money was invested so the loss was smaller.  More [...]

  5. Liberal Conspiracy » Why Tories are deluding themselves over Brown’s gold sell-off

    [...] I think LO’s attempt at a defence – continued on here on LibCon – does not go far enough. Sure, the money was invested so the loss was smaller. More [...]

  6. Alfred Houghton

    RT @libcon: What happened to Brown's Gold? http://bit.ly/cb3CBG

  7. appleblossombea

    @IamalrightJack @GracieSamuels This is a left field take on it & final reading for me on subject http://t.co/omI7yQl7

  8. Sunny Hundal

    @trippypip I was against going into Iraq (didn't the Tories vote for it?) and the Gold sell-off point is silly http://t.co/51K4h6w9





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