Brown loses £52m on gold sale
BRITAIN is nursing a £52m loss over the controversial switch of official reserves out of gold and into the ailing euro, Financial Mail has established. The money lost would be enough to finance more than half the extra funds pledged by Chancellor Gordon Brown in his pre-Budget report for British involvement in the war against terrorism.
Alternatively, it would cover the whole £30m bill for beefing up domestic policing and security measures in the wake of 11 September.
On top of this, the cash would cover three key programmes for improving public services - the £6 million incentive scheme to keep experienced RAF pilots and navigators, the £5m plan to tempt doctors into general practice and a £9.2m project to recruit graduates into fasttrack teaching careers leading to senior positions.
The bullion sales triggered a furore when they were announced in 1999. Brown said the proceeds of the 415-tonne sale would be invested 40% in euros, 40% in dollars and 20% in the Japanese yen.
He was accused by some of trying to take Britain into the euro by stealth. The Treasury replied that it was trying to achieve a 'better balance' in Britain's official reserves.
Since then, the Bank of England - acting on Treasury instructions - has held 15 auctions. Two remain to be held, the next this Wednesday, after which the sale programme will be complete. To date, Britain has switched 142 tonnes of gold into euros. But the single currency's dismal performance means it has lost value against bullion as well as against most major currencies.
Britain is now saddled with about 1.4bn euros, at present worth £832m. But the gold that was sold would, at today's prices, be worth £884m.
Once the auctions have finished, Britain's gold holdings will be among the smallest of any major country, accounting for just seven% of total reserves. The reserves are held by the Treasury against a rainy day.
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