The £22 billion that Gordon Brown’s gold sale cost Britain, while the price of the precious metal continues to rise

The rising price of gold has made Gordon Brown’s decision to sell British reserves even more costly.

At current levels, Brown’s move, announced in 1999, has cost the country £22 billion. This sum would be enough to fill the “black hole” that the government claims to have inherited in public finances.

The mounting loss from the then Chancellor’s controversial decision to dump more than half of the country’s reserves a quarter of a century ago arises because the price of the precious metal has risen sharply since then.

Last week it hit another record high of $2,686 an ounce amid rising geopolitical tensions, especially in the Middle East. Gold is traditionally considered a “safe haven” in turbulent times.

Central banks, especially those in China, have also been big buyers as they seek to reduce their dependence on currencies like the dollar.

Brown’s decision to sell 395 tonnes between 1999 and 2002 at an average price of $276 an ounce means Britain has missed out on the recent gold rush. At the time, gold, which bears no interest, made up about half of the UK’s net foreign exchange reserves.

The Treasury wanted to sell the asset to avoid being exposed to potentially volatile prices and strengthen Britain’s reserves by spreading risk across other assets such as government bonds.

But the sale turned out to be at the bottom of the gold market, meaning the Treasury lost $30bn (£22bn) of subsequent profits.

That sum is the same as the “black hole” that Chancellor Rachel Reeves controversially claims she inherited from the previous government, although a large part of this is due to her own decision to grant pay rises to train drivers and railway workers. public sector.

Reeves reportedly plans tax increases and spending cuts to close the gap. It has also scrapped the £300 winter fuel subsidy for millions of pensioners.

and is looking to change the rules that limit how much you can borrow. Experts say the price of gold could rise even further.

“Geopolitical risks, such as the current conflicts in Gaza, Ukraine and elsewhere, will sustain demand for gold as a safe haven,” said Fawad Razaqzada, market analyst at broker StoneX.

A Labor spokesman said: “The £22bn black hole the Conservatives left in the public finances is solely due to their economic mismanagement – they collapsed the economy, made promises they couldn’t keep and then called an election and ran away.”

The last Labor government transformed lives and it is already taking on the urgent work of cleaning up the Tories’ mess to improve the situation for workers.’

Gold is up 29 percent this year and silver is up more than a third. Gold price strength has been reinforced by the US Federal Reserve’s half percentage point cut in interest rates earlier this month.

Many small investors like to keep some of their holdings in gold, but since it does not earn interest, it is more attractive when rates are low.

There are expectations of a new 25-point cut by the US central bank in November and December.

Recent US economic data has been mixed, increasing uncertainty about the economic outlook, which may also drive up the price of gold.