LETTER: The price of oil and the price of gold

The rising price of petrol is now causing severe economic distress. It’s a pity things have come to this disastrous situation.

At the time of writing a barrel of crude oil costs around $126 in paper money (this is money that can be created at will out of nothing more than paper and ink).

By way of comparison in terms of hard money – precious metal – the price of a barrel of oil has hardly risen at all. Forty years ago when gold was $35 per ounce, oil traded at $2.90 per barrel – about one-twelfth ounce of gold. Today gold is trading at around $1450 ounce and one – twelfth of that is about $121, which will come pretty close to buying a barrel of crude oil.

In 2002, Gordon Brown, in an act of monumental folly, decided to diversify our national reserves by selling off half of the gold held by H.M. Treasury at an average price of $275. Vince Cable is on record as supporting this policy but challenged the timing.

Nevertheless, in 2008 when gold was selling at $989 an ounce Cable said: “There happens since [Gordon Brown sold the reserves] to have been a gold price boom, but it will not last forever”.

Readers can draw their own conclusions about the financial acumen of the political elite, but one thing is sure: those that place their faith in the political class and take financial advice from the mainstream media will surely be ruined.

KEVIN HEY

Castle Road, Colne