Gold (Hansard, 22 July 1999)

§ 1. Mr. Simon Burns (West Chelmsford)
What the difference was between the money the Treasury received from the recent sale of gold and the purchase price of that gold. [91091]

§ 2. Mr. Michael Fabricant (Lichfield)
How much gold from the National Reserves he will sell next month. [91092]

§ The Chancellor of the Exchequer (Mr. Gordon Brown)
Continuing the policy of the previous Government, this Government have accepted the principle of gold sales and have therefore continued to support the sale of International Monetary Fund gold to fund debt relief for the poorest countries.
In order to achieve a balanced portfolio of our national reserves, we will sell 125 tonnes of gold this year by the preannouncement and phasing of sales. There will be no sales of gold in August.
In answer to the first part of the question asked by the hon. Member for West Chelmsford (Mr. Burns), most of the gold held in our reserves was acquired before 1950 at a purchase price of $35 an ounce or less. Therefore, in answer to the hon. Gentleman's detailed question, the 25 tonnes of gold sold on 6 July would have been purchased for a notional $30 million or less. The gold was sold for $209 million, which makes a cash profit of more than $170 million.

§ Mr. Burns
I am slightly surprised that the Chancellor did not give the figures in updated terms. Does the Chancellor accept that, between 7 May and the present, the price of gold per ounce has fallen from $287 to $254? That means that, as a result of the sale, every man, woman and child in this country has paid £10. Does the Chancellor think that the gold sale on 6 July helped or hindered the national interest? Given the fall in the gold price and the uncertainty in the gold market as a result of his announcement, will he postpone or put on hold future sales?

§ Mr. Brown
The answer to the latter part of the hon. Gentleman's question is no. The mistake was made by the 1310 previous Government. When the price of gold was valued at anything between $300 and $800 per ounce, they took no action while other countries around the world were rebalancing their assets portfolios. Although the hon. Gentleman complains about the British sale, over the past few years, Australia, Austria, Canada, the Netherlands, Belgium and Switzerland have been selling their gold portfolios. Canada has sold 500 tonnes, the Netherlands has sold 700, Belgium has sold 707 and Switzerland plans to sell 1,300. We plan to sell 125 tonnes this year.
If the hon. Gentleman wants to take up the case of South Africa, I must inform him that it has halved its gold assets in the past 20 years and it sold more gold last year than we will sell this year. Those are the facts of the position. It is about time the Conservative party looked at the facts instead of being opportunistic in this matter.

§ Mr. Fabricant
Have not the Government achieved a double whammy not only by trumpeting the sales of gold as the price has fallen, but by saying that 40 per cent. of the sale proceeds will be used to purchase euros? Although the euro rallied slightly this morning and, as the Chancellor will know, is currently valued at $1.0535, is he not aware that the value may fall again in three or four months? What is his estimate of the value of the euro in three, four or six months or a year?

§ Mr. Brown
There is no change in the balance of our portfolio between euros, dollars and yen. The hon. Gentleman, who was a Parliamentary Private Secretary at the Treasury, should know that the Chancellor whom he served supported the principle of gold sales in relation to the IMF. We will take no lectures about the use of the national reserves from the party that, when in power, lost £4 billion in a day on Black Wednesday 1992.

§ Mr. Fabricant
On a point of order, Madam Speaker. As the Chancellor refused to answer my question about the value of the euro, I shall seek to raise the matter on the Adjournment.

§ Madam Speaker
In that case, I must move to the next question.