Why did the Chancellor do this? He claimed that the value of gold was volatile, and that Britain’s portfolio required diversification. Put differently: as with so much else, the style of the Blair government meant doing exactly what the “experts” told them.
Common sense would tell you that gold is a very old form of money and holding some of it might provide protection against the contingencies thrown up by history. But history seemingly held little weight for Blair’s cult of the expert.
It holds a great deal of weight today, with premature declarations of its end now looking particularly foolish. The geopolitical order is being shaken violently and there are no guarantees that the dollar-based system, born out of the last global conflict in the Second World War, will be with us forever.
In such a world there is every reason to believe that people might return to older forms of money to weather the uncertainty, or even to try to create a new monetary system. If something is not broken, there is no need to fix it as the old saying goes – and the gold standard has worked as a way to do business time and time again.
Given this, it would be nice to have a bit of that yellow metal in the bank. Sadly, the economists and politicians who gave the Bank of England the powers that have done such damage to the Treasury’s balance sheet decided otherwise for us, consigning barbarous monetary relics like gold to the dustbin of history.
We can only hope we don’t pay too high a price for their arrogance.
