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Gold sales cost central banks $40 billion

Financial Times reports that a decade of gold sales has cost Europe's central banks $40 billion.

"Europe's central banks are $40bn (£26.4bn) poorer than they might have been after they followed a British move taken 10 years ago todayto shrink the Bank of England's gold reserves, analysis by the Financial Times has shown.

London's announcement on May 7 1999 that it would sell a large share of the Bank's gold reserves in favour of assets offering a return, such as government bonds, was the high water mark of so-called "anti-gold" sentiment among European central banks.

Many of these banks, such as those in France, Spain, the Netherlands and Portugal, decided later in 1999 to follow Britain and sell off their reserves. At that time, gold was worth about $280 an ounce, less than a third of its current level of more than $900."

Of course, as many gold market observers will tell you, gold selling by the central banks is not typically a profit-maximizing endeavor: it is often done to downplay the importance of gold as a form of money competitive with paper currencies.

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