In this blog, I try very hard to stay politically neutral, and I endeavour to report the facts rather than opinion clouded by any political leaning. Of course, Government policies affect the economic backdrop in which investment markets operate, and politics and markets are intrinsically linked.
However, at the M&G "Meet the Managers" Conference, speaker Steven Andrew presented a slide showing a graph of the price of Gold and overlayed a marker as to when Gordon Brown - then Chancellor of the Exchequer - decided to sell 1/2 of the UK's Gold reserves. Cue much derision from the massed audience.
I decided to dig a bit deeper, and discovered that Brown sold the Gold in a series of auctions between 1999 and 2002 - the sheer quantity sold meant that the sales had to be "drip fed" through the market to avoid destabilising the price of Gold too much. The average price obtained was $280 an ounce. The monies raised were used to diversify into foreign exchange, particularly the Euro.
The spot price of Gold closed yesterday at $1833 an ounce some 654% higher than the average price achieved between 1999 and 2002. If Brown had of hung on, and sold now, the UK would be £13 billion richer.
And the trade could look even worse, as the fundamentals look in place for Gold to move towards the $2000 an ounce mark in the next few months. There is always the risk that Gold could retrace given its' stellar run since 2008, but market momentum is certainly in its' favour at present.
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