Wednesday 8th May 2019
This morning, Parliament Street’s Director of Financial Services, Tim Focas was featured in CityAM debating that Gordon Brown was right to sell off the government’s gold reserves 20 years ago.
The piece can be found online here.
Alternatively, you can read Tim’s argument below:
Was Gordon Brown right to sell off the government’s gold reserves 20 years ago?
Tim Focas, director of financial services for Westminster think tank Parliament Street, says YES.
While Gordon Brown could have sold at a better price, for the vast majority of governments across established economies, there is no real point to holding gold.
The purpose of foreign exchange reserves is not for the state to manage wealth on behalf of the country. People should do this for themselves.
UK reserves should only really be used to underpin monetary policy, and to halt any possible crisis such as a significant run on the pound, not as any kind of sovereign wealth fund. The trouble is that gold is not well suited as a state asset, as its value is very likely to drop as soon as it is deployed as a government intervention mechanism.
The market is of course very different to that of two decades years ago, and any government selling today will not have anywhere near the same impact. But this doesn’t change the cold hard truth that gold is a market best fit for sophisticated speculators, not the state.
