In May 1999, the UK Treasury announced it would sell more than half of Britain's gold reserves. What followed became one of the most debated decisions in modern financial history, known ever since as Brown's Bottom.
What happened
Between 1999 and 2002, under Chancellor Gordon Brown, the UK auctioned around 395 tonnes of gold. The stated reason was portfolio diversification: moving reserves out of gold and into currencies and bonds. Unusually, the sales were announced in advance, which pushed the price down before a single bar was sold. The auctions achieved an average of roughly 275 dollars an ounce, close to a twenty-year low.
The cost of the decision
Gold has since multiplied many times over. The tonnage sold for around 3.5 billion dollars would be worth tens of billions at today's prices. The episode is now studied as a lesson in timing: the point of maximum pessimism about gold turned out to be almost exactly its bottom.
What it teaches savers
Two things. First, even governments get gold badly wrong, usually by treating it as a dead asset just before it proves otherwise. Second, the crowd is often most dismissive of gold at precisely the wrong moment. The investors who bought quietly through that period of maximum scorn were the ones the following two decades rewarded. It is a useful story to remember whenever gold is out of fashion.
Speak to us
This is information, not a sales pitch. If you would like to talk anything through, book a call with the team or phone 0208 064 0076, Monday to Saturday, 8:30am to 6:30pm. When you are ready, our range of tax-free UK gold coins is available to browse at any time.
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Sources
- BBC News, the 1999-2002 UK gold sales twenty years on
- GoldPrice.org, historical gold prices (1999-2002 lows)
Gold Tier Advisory provides information on physical gold ownership. We do not provide regulated financial advice. Past performance is not a guide to future returns.
