Bank of England Gold cracks up
by Gill Montia
Story link: Bank of England Gold cracks up
The UK Treasury holds gold reserves to the tune of 320 tonne, but some of the gold bars kept in the Bank of England’s vaults are showing their age and cracking up because of faults in manufacture.
Last week, a Freedom of Information request by Metal Bulletin, the trade journal, revealed that cracks and fissures have appeared in some of the gold bullion.
This could temporarily reduce the value of the UK’s reserves, although the Bank has yet to establish exactly how much of its gold reverses are deteriorating in this way.
In the UK, the quality of gold is defined by the London Good Delivery (LGD) standards, which have been drawn up by the London Bullion Market Association.
It would appear that bullion originally imported in the 1930s and 1940s falls below the LGD standard.
This is most likely to be as the result of the poor refining processes used at the time, which are known to lead to this type of deterioration.
The Bank of England has stated that the problem is only superficial and does not bring into dispute the purity of the gold.
However, it is certain that gold bullion showing signs of this type of deterioration would attract a lower price were it to be sold now, and it seems likely that the bank will have to re-refine it to meet the LGD standard.
The Bank of England’s gold reserves are held as a form of insurance against turmoil in the world’s money markets and the value of its reserve currently stands at around £4 billion.
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