The cost of Gordon Brown’s decision to sell the nation’s gold on the cheap 25 years ago has ballooned to £35billion.
The then-Labour Chancellor sold 395 tonnes of bullion between 1999 and 2002 for a paltry £2.6billion.
The gold price has soared since then, hitting a record high of $4,040 an ounce on Wednesday.
It means the gold that Mr Brown sold quarter of a century ago would be worth £38billion today.
Gordon Brown sold around half the UK’s gold reserves when he was Labour Chancellor
The difference is a whopping £35.4billion – highlighting the cost of his decision at a time when the current Labour chancellor Rachel Reeves is desperately scrambling to raise funds.
Tory business spokesman Andrew Griffith said: ‘A decision which was foolish at the time now looks catastrophically ignorant. An apology is due to the nation’s children whom his decision has burdened with extra debt.’
Mr Brown announced plans to sell almost half of Britain’s gold reserves in May 1999 to reduce the country’s reliance on bullion.
He later insisted it was a ‘perfectly reasonable’ decision as he looked to diversify Britain’s investments – ploughing much of the money raised into government bonds.
But his critics claim it was one of the worst financial decisions in British political history and cost the nation billions.
Mr Brown sold at an average price of $275 an ounce – a level that has since become known as ‘the Brown bottom’.
The price of gold has risen almost 15-fold since then.
Veteran City commentator David Buik said: ‘Had Gordon Brown had the foresight to keep the gold reserves, the UK’s finances might have been £35billion to the good. And to think “prudence” was his byword.’
Gold has gone on a dizzying rally this year, climbing 50 per cent to a string of record highs, as investors worried about the state of the world look for somewhere safe to park their cash.
The gold price has risen 50 per cent this year to a record $4,040 an ounce
While institutional investors and central banks have been driving the gold rally, experts say it is now being turbocharged by retail investors jumping on the bandwagon for ‘fear of missing out’ – or FOMO.
Luca Paolini, chief strategist at Pictet Asset Management, has described it as ‘gold-plated FOMO’.
The rise has been spurred on by a weakening dollar, hit by Donald Trump’s trade war and concerns about the US economy, as well as geopolitical tensions and anxiety over inflation and government debt.
The US government shutdown, which is now in its second week, has also added to investor nerves and sent them rushing for the yellow metal.
Investors traditionally view gold as providing protection from wider turbulence and high inflation. The price has also been boosted by the prospect of lower interest rates, which reduce returns on other investments making gold look more attractive.
BestBrokers said central banks worldwide have been stockpiling gold in response to the rally, with global gold reserves rising to an unprecedented £3.48 trillion in October so far, up 37.5 per cent from the end of 2024.
The US remains the world’s largest gold holder with 8,133 tonnes, now valued at $1.04 trillion dollars (£776 billion), marking the first time any nation’s reserves have surpassed the one trillion US dollar threshold.
Ewa Manthey, commodities strategist at ING, said: ‘Gold has staged a historic rally, doubling in less than two years, spurred by central bank buying as it diversifies away from the US dollar, President Donald Trump’s aggressive trade policy and conflicts in the Middle East and Ukraine.’
She added: ‘Markets are pricing in a quarter-point US rate cut this month, which would further benefit gold, as it doesn’t pay interest.
‘Policy uncertainty and growing bets on Federal Reserve easing are keeping safe-haven demand strong.’
Ahmad Assiri, a research strategist at Pepperstone, said the rush for gold was set to continue for some time yet.
He said: ‘Gold’s message is clear – in a world where the gap between valuations and policy credibility continues to widen, gold remains the timeless asset that bridges enduring value with a renewed relevance.’
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