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.

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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.


Castle Road, Colne

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