“The decision to sell the reserves was approved by then RBA governor Ian Macfarlane and then treasurer Peter Costello.”
The RBA revealed in July 1997 that over a six-month period, it had sold 167 tonnes, reducing Australia’s reserves to just 80 tonnes. At this time, the value of its gold assets fell from $3.6bn to about $1.1bn. The RBA’s sales pushed the world gold price down to an 11-year low, returning just $2.4bn for the gold (worth $7.4b today) that was sold via a single broker engaged without a tender.

A board paper recommending the decision to sell conceded that gold served as “insurance against a breakdown in the international financial system”, but it then dismissed the need for holding this valuable asset. The paper has been obtained by The Australian under Freedom of Information laws.

People might not remember but it was a fashionable idea to discount the value of gold (barbarous relic) and several treasurers followed it. Gordon Brown also cost the UK billions.

What Costello didn’t know is that he would precipitate a decade long decline in the Australian gold mining industry that is only now getting back on its feet.

Read The Australian