Sunday, 28 August 2011

The Brown Bottom

I have to say the title of this post made me chuckle given the association with toilet humour and the gastro conditions suffered by some in this house! But it is a serious post, on a subject frustratingly pertinent given the current volatility on the stock markets and constant discussion on "Debt" and the "Cuts". I am constantly challenged by friends, Blog readers and online acquaintances how I could continue to lay the blame for the recession firmly at the feet of Labour. The banks clearly had their role and were perhaps the short term catalysts but the (then) government's foreknowledge of what was coming and their collective political fear of acting on such information is enough for me. When coupled with the traditional "tax and spend" of Labour past and present you have a toxic combination of a government hurtling into the abyss with their hands over their ears and their eyes tightly shut. It goes with my comment below, that benefits, payouts and support without a mutual contract of responsibility create the very social unrest Social Security attempts to avoid. So this information arrived today in my inbox and I decided to post it!

With the gold price hitting new nominal highs it seems a good moment to remind ourselves about the consequences of Gordon Brown’s sale of much of the country’s gold reserves.

In 1999-2002 he sold 395 metric tons of gold at an average price of $275 an ounce. Today the price stands at $1749 an ounce. No wonder Brown’s sale on the gold price charts is known as "The Brown Bottom". He also gave notice to the market that the sales would take place, thereby giving market participants every opportunity to drive the price down in advance.

Here are the approximate calculations of the value (in millions)which would have accrued if we still held the gold today:

Sold then
Value now

99 - 02
2011
Quantity sold tons
395
395
Average price $/oz
$275
$1,700
Sum realised US$m
$3,477
$21,492
Exchange rate avge.
$1.52
$1.63
Sum realised £m
£2,287
£13,185


The 2012 Olympics are estimated to cost some £9billion, so we could have paid for the Olympics with the amount of value he surrendered and had £2billion left in change. As of December 2010 estimated gold reserves were as follows:-
US
8,133 tons
Germany
3,401 tons
Italy
2,452 tons
France
2,435 tons
UK
315 tons

The impact of the man’s stupidity is breathtaking.

1 comment:

  1. Whoa! This is both an impressive statistic and scary. The funny thing is that something of this significance to the UK economy I don't remember being reported in Australia (that is where I am)

    ReplyDelete

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