From the Port Phillip Insider (AUS) by Shae Russell and Jim Rickards –
Gold is money. And money people forget that. And while central banks have dabbled in and out of owning physical gold, there’s the famous ‘Gordon Brown’s Bottom’, where the UK’s Chancellor of the Exchequer — fancy talk for a country’s Treasurer — famously sold 395 tonnes of gold over 17 auctions between July 1999 and March 2002, receiving an average price of US$276 per ounce.
Sure, the UK raised 2.2 billion pounds.
However, this gold selloff really enabled the UK to ‘invest’ in the euro. Arguably, you couldn’t call it investing in the euro…more like financially supporting the fiat currency experiment of our time.
Australia had its own Gordon Brown bottom moment.
In the first six months of 1997, the Reserve Bank of Australia sold 167 tonnes of the shiny metal. The central bank netted $2.4 billion along the way. But rather than selling the gold at auction, it was a one-off transaction through a broker. Leaving Aussies with a paltry 79 tonnes sitting somewhere in a vault.
In a paper obtained by the Australian Freedom of Information laws, The Australian claims that the RBA felt the ‘commodity’ — note that they call gold a commodity, and not a currency — wouldn’t play a role in a future financial crisis.
However, there’s new data to suggest that some central banks are buying physical bullion at a rate not seen since the late 1970s.
A report from the Official Monetary and Financial Institutions Forum (OMFIF) shows central banks have been buying up gold at an average rate of 350 tonnes per year.