UK Selling Gold....Why???

In 1999 - 2002, the UK auctioned 7% of it's gold reserves when the price bottomed out. It was sold on the 'open market' yet only specialist buyers representing large multinationals had access to it. You had to be a member of the LBMA, or a monetary institution with an account with the central bank. Also, the bars were sold at multiples of 400 troy oz, with the market price (at the time) of each troy oz being in the region of 282 pounds sterling. Hence, you needed over a hundred thousand pounds sterling cash, just to make a bid for 1 share. And more interestingly, the bidders with the highest price would be allocated a larger amount, but the PRICE YOU PAY, would be that of the LOWEST winning bid. It is an unusual move to begin with, but there are a few issues that rise that set one to think....

1. Why was the gold sold when the market bottomed out?

2. The average citizen would not have had the capital to buy the gold, so the argument that the sale was open to all was not true. When the gold is the property of the govt, hence the people, shouldn't the average citizen have access to buy it as well?

3. Large corporations would have been the main benefactor, mainly in the telecommunations, electronic and high tech industry where gold is used as part of the manufacturing process. They would have benefitted by being able to buy gold at below market value price.

4. Specialist dealers and traders made profit with the sale of the gold by reselling it later when the market took off as it was predicted by analysts even before the auctions started.

5. The UK govt has basically done a deal to profit corporations yet the average citizen gets screwed.

I smell Illuminati control and big corporations screwing the little guy all over this one......

Let me try to answer some of your questions.

Originally posted by hellfire3

1. Why was the gold sold when the market bottomed out?

Market bottoming out? The price of gold has been steadily increasing since before 9/11. I'm not sure what your source was for this claim, but a websearch would easily reveal it's not true.

2. The average citizen would not have had the capital to buy the gold, so the argument that the sale was open to all was not true. When the gold is the property of the govt, hence the people, shouldn't the average citizen have access to buy it as well?

When a country sells its gold reserves, it is sold on the open market. This doesn't mean it's open to individuals. It means it's sold, as you say, to LBMA members. This is to insure reliable delivery and speedy, efficient exchange. The ordinary individual is not going to have access to the trading mechanisms available to institutions, just as the ordinary individual does not have access to the NYSE floor. They would have to purchase their gold through intermediaries, who are LBMA members.

Individuals always can buy gold at market price direct from their government these days from most countries. In Britain, this would be done by purchasing bullion, which usually comes in the form of gold bars or coins called sovereigns, which are called gold Brittanias. They can be purchased direct from the royal mint by individual investors and collectors.

3. Large corporations would have been the main benefactor, mainly in the telecommunations, electronic and high tech industry where gold is used as part of the manufacturing process. They would have benefitted by being able to buy gold at below market value price.

How did they buy gold at below market value price if it was sold on the open market via auction? The type of auction you describe is called a Dutch Auction and it ensures speedy transactions. Nothing shady or underhanded about it. You can click on the link for more information on these auctions (the article is in the context of IPOs- ie, stock offerings- but the principal of the auction is the same). Ebay lets you host Dutch auctions, and should contain some more info.

4. Specialist dealers and traders made profit with the sale of the gold by reselling it later when the market took off as it was predicted by analysts even before the auctions started.

Yep.. this is how brokerages, investment banks, and hedge funds stay in business.

5. The UK govt has basically done a deal to profit corporations yet the average citizen gets screwed.

How did the average citizen get "screwed"? Average citizens have never had access to the stock market directly, let alone commodities trades. If you wanted to purchase the gold, like I said, you can do it through your government, and if the price was, as you say, bottomed out (which it hadn't) the average citizen screwed himself by not purchasing any at that time through an intermediary.

-koji K.

Thank you koji_K for your reply. Firstly, the graph you provided has just illustrated my point:
The auctions were held in 1999 - 2002. And the analysts predictions before the auctions were that the price of gold was going to go up AFTER the auctions were held....as you can see in the years 2002 - 2005, but before this the price was low. But also, a little information is deceiving as they say....lets look at the bigger picture....by the way, thanks for the link to www.kitco.com. As I said, the question is why did the british govt sell gold when the market bottomed out....

I do not know how to post pictures to the BB, but check out this link:

www.kitco.com...

When you are there, select 1995 - 2005 under the box Multi Year Gold and you will see my point. The auction was started off once the price BOTTOMED out.

Also, I do agree, the stock market is not open to individuals like you and me, we have to go through a broker. But, with a couple of thousand dollars, the average joe would be able to buy stocks....yet....with the way the gold was sold.....minimum of 400troy oz per transaction or multiples thereof, you would need over 100k sitting in an account to take part in the purchase.

Dutch auction....making things easier for processing...I don't buy that. I'd assume that the BoE do have computers...and if there were any increased processing cost by selling gold at the bid price rather than the lowest bid price, the additional expense would surely have been covered by the additional revenue.

And yes, sure the average joe can buy gold coins from licensed dealers.....but at market price....not auction price which is lower.

Let's look at the situation here....the sale of gold at it's lowest point in years, in an 'open' auction where you'd have to have a few 100k lying loose in your bank to participate, where the successful bidders pay the lowest bid price and the main benefactors were major multinational corporations and financial giants. Again koji_k...I smell illuminati here.....

AHa.. I think I misunderstood regarding the dates you mentioned. Well, it could just have been bad judgment. I will look into this some more when I have time, as I'm interested to know why as well.

Regarding the illuminati- it really depends on how you see the world. I admit the average joe has always been at a disadvantage compared to institutions and governments in the marketplace. But to an extent it's like comparing apples and oranges. Two different things... some systems just weren't set up to begin with to benefit the individual, or if they were, they were set up to benefit the individual as a side effect of benefitting governments.

You could look at it this way- if a government helps out a private company, say, like the US helps Boeing or the EU helps Airbus, sure, the individual isn't being helped directly, but he might be helped down the line because if these companies do well, they have more job openings available and/or can pay higher salaries.

I disagree with you on the Dutch auction aspect. This type of auction is ancient and if there was anything inherently unfair about them I'm sure a thousand people would have noticed by now and scratched them. Even if only on Ebay, where they are basically dealing with the average man, not institutions.

But, I wouldn't be on ATS if I didn't believe in conspiracies of some sort- we really don't know everything that goes on behind the scenes.

-koji K.

If what you guys are saying is true, then it could be that the stock market is selling the gold when it is bottemed out so the illuminati people can buy it. Think about it. Doesnt the bible and other psychic predictions say that gold value is gonna go up? Just a thought.

I got to say my ears pricked when an American financial mag. mogal came to Australia and gave a televised talk on money. Almost all he had to say was, "sell gold"," don't buy gold", "bring the gold price down" and "invent the next iPod". When someone like that says things like that I know I want to own gold!

Here's an interesting fact about gold, which I don't want to be taken as advice, but I think is interesting on its own...today, gold is selling at around 400-420 USD an ounce... in 1980, gold rose to above 830 USD an ounce.. in 1980 dollars! This would easily be above 1000 bucks an ounce by todays standards. Many experts are saying gold has had its run for today, but I think it's not impossible, especially if the economy worsens, for gold to rise above its 1980 prices sometime again. Maybe not soon, but my point is that the price of gold today is nowhere near it's recent historical highs.

-koji K.