Treasury offloads gold
reserves
Gold: There is too much of the shiny metal about
Britain is to sell off a big chunk of its gold reserves
because what was once one of the world's most
precious commodities is losing its value.
The UK is selling 415 tonnes of its 715 tonnes of gold,
around 10% of its total Treasury holdings, as it
'restructures' its reserves.
This is more than half the treasury's hoard of gold,
secured in vaults under the Bank of England.
A UK Treasury spokesman said: "Our aim is to optimise
and diversify our portfolio with a sensible risk return
balance."
The UK will buy more foreign currencies with the
proceeds.
The first tranche of 125 tons will be sold in the next year.
Gold plunged by more than
five US dollars an ounce as
the market reacted to the
news.
It is now worth just over $280
a troy ounce. A troy ounce
weighs 1.1 ounces.
Gold was once one of the
most valuable assets in the
world but as more and more
of the shiny metal swills
around its value drops.
Gold's falling standard
Critically, for banks it now gives relatively poor returns
and several have been selling off their reserves, including
the Australians, Belgians, Dutch and even the Swiss.
The International Monetary Fund is to consider selling off
some of its gold to help fund debt relief for poorer
countries.
The significance of Switzerland is that its 2,600 tonnes
of gold are the third-biggest reserve of holdings in the
world, after the US and the eurozone area.
Over the last 20 years bonds
and shares have given better
returns and many banks and
finance institutions are now
replacing gold with better
yielding investments.
The Swiss reckon the cost of
lost interest in holding gold
rather than US Treasury
bonds is equivalent to around
$400 a year per household.
Tarnished reputation
The value of gold has failed to keep pace with inflation, it
has underperformed shares and bonds and has been
expensive to store.
Banks, like everyone else, are under pressure to improve
the returns on their reserves.
The European Central Bank has decided to hold only
15% of its reserves in gold, well below the 30% average
of most of the countries in the eurozone
news.bbc.co.uk
What they do not tell you is that Exploration is virtually at the stop..Mines are getting closed...Production costs are high
and US Bubble along with dollar are about to burst... |
