UK gold sold with success
By Ed Crooks, Economics Editor
Published: January 11 2001 21:51GMT | Last Updated: January 11 2001 22:01GMT
The government's controversial programme of selling part of Britain's gold reserves to buy foreign currencies has been a success, according to a report published on Friday by the National Audit Office, the public spending watchdog.
Critics - including gold traders, gold-producing countries and the Conservative party - had argued the government's well-publicised gold sales were destabilising the market and costing the taxpayer tens of millions of pounds.
The NAO's inquiry did not address the fundamental question of whether selling 415 tonnes out of the government's 715 tonnes was a good idea or not. But its report backed the government's decisions on the structure of the sales through regular auctions, and on the question of value for money for the taxpayer.
Sir John Bourn, head of the NAO, said: "In designing and implementing the gold sales programme so far, the Treasury has done well".
However, the NAO suggested that now 225 tonnes had been sold, the Treasury should hold a "mid-point review" to assess whether any aspects of the sale could be improved.
The World Gold Council, which represents gold producers, welcomed what it described as "implied criticism of the Treasury" in the report.
The Treasury said the government and the Bank of England would be "considering the report's recommendations in due course".
The Tories released calculations from the House of Commons Library, which they said showed that the value of the currencies bought by the Treasury with the proceeds of the sales was by last December about $100m (£67m) lower than the value of the gold that had been sold.
However, the NAO report said that taking income from the foreign currency securities into account, the Treasury was on December 18 showing a gain of £23m over what the gold would have been worth.
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