Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus Infection Spread and Deaths Forecast 2020 - Video - 28th Jan 20
Is an Accommodative Fed Bullish for the Stock Market? - 28th Jan 20
Trillion-Dollar Stock Market Cap Club - 28th Jan 20
Corona Virus Wuhan Global Pandemic 2020 Deaths Forecast and Market Consequences - 28th Jan 20
Palladium Surges above $2,400. Is It Sustainable? - 27th Jan 20
THIS ONE THING Will Tell Us When the Bubble Economy Is Bursting… - 27th Jan 20
Stock Market, Gold Black Swan Event Begins - 27th Jan 20
This Will Signal A Massive Gold Stocks Rally - 27th Jan 20
US Presidential Cycle Stock Market Trend Forecast 2020 - 27th Jan 20
Stock Market Correction Review - 26th Jan 20
The Wuhan Wipeout – Could It Happen? - 26th Jan 20
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Scotland's 26.35 Tons Of British Gold

Politics / UK Politics Sep 09, 2014 - 12:18 PM GMT

By: Andrew_McKillop


Massive Threat to England
Proving it isn't yet the end of summer and its silly season, at least for journalists (and politicians), reports from sources including Reuters -  “Ownership of UK gold up for renegotiation if Scotland votes Yes”, September 9 - say that independent Scotland could lay claim to a part of the United Kingdom's 310-tonne gold reserves if votes go in favour of the "Yes" campaign. Ownership of Britain's bullion hoard will be up for negotiation along with other assets. How about the debts and liabilities?

On the basis of how Scotland and England would, politicians claim, officially share out and divide UK national debt upon separation of Scotland – with 8.5% for Scotland based on its population and GDP – the same divvy-up of remaining Bank of England gold reserves would give Scotland 26.35 tons. This is certainly more than World Gold Council estimates for the bullion hoards of several African low income countries, but for example is around one-tenth of Libya's gold hoard under Gaddafi, most of which “disappeared” when he disappeared. Unlike him, the gold stayed in this world.

When Tunisian dictator Zineddine bin Ali fled the country in 2011 to a safe house and warm welcome in Saudi Arabia, journalists covering the event reported his Airbus had around 20 tons of Tunisia's national gold bullion holdings on board. So an independent Scotland is better off than Tunisia!

Put another way, the UK's heavily shrunk and downsized “hoard” of gold places this fiduciary gold holding at 18th in the world by national holdings. Scotland's 8.5% would rank it so low by world bullion holdings that its role backing a new and separate money for Scotland is not even worth talking about.   Trying another comparison,  Scotland's gold “hoard” at current gold market price levels would be worth a princely $1.7 billion.

The Scottish share of UK debt is placed at about 120 billion pounds or $190 billion!

A Nice Line of Patter for FX Speculators
Quite amazing by its stupidity, both FX-foreign exchange dealers and both English and “No” vote politicians including Gordon Brown and Alastair Darling are working “the Scottish threat to UK gold”, to their hoped-for political profit, and to the direct profit for FX dealers speculating against the GB pound. The gold “hoard” that is threatened by the now-dangerous Scots sounds very, very impressive to an average idiot.

Things were rather different for Scots-born Gordon Brown in 1999-2002 when as UK Chancellor he engaged a disastrous and massive sale of UK bullion at a near-ultimate-low for world gold prices. Brown “disposed of”, which is the right term, almost 400 tonnes of the United Kingdom's gold via a series of auctions, at a sale price for gold at 20-year lows. Now he is terrified of or appalled by the prospect of an independent Scotland laying claim to 26 tonnes!

How can we not believe him? The same applies to Darling, who regularly uses the claim – as “No” vote propaganda – that he personally intervened and saved the “Scottish” banks RBS and HBOS. The only problem is these are private international banks which, when it suits them, suddenly discover their “national identity”.Their liabilities and debts didn't concern the 7.84 billion pounds or $12.6 billion total value at today's gold market rates for the total 310 tonne remaining gold “hoard” of the UK.

They concerned rather a lot more than that – close to 100 times more, and that “doesn't count the derivatives” which all private international banks are constantly inventing and trading. Private international banks, in the UK case calling themselves “English” or “Scottish” when it suits them – and only then – are themselves right now and with no shame speculating against the GB pound in their FX trading divisions. Their commodities trading divisions are speculating for high oil prices – until the moment that traders decide to “pull the plug” on the oil price !

The High Risk Events
 Again amazingly the first one, supposedly, is the risk that an independent Scotland lays claim to UK gold. This risk is nothing to do with private bank liabilities! The patter is strictly kept in the domain of “assets” or so-called assets – but never concerns real debts and liabilities.

The asset-talk then quickly shifts to North Sea oil, isn't it surprising, but more surprisingly almost never mentions whisky. When are the English going to make claim to the small parts of the Scotch whisky industry they do not already own” Or at least accuse the Scots of wanting to steal it? And what about salmon, cod, herring and the Wee Haggis to which all-England has been emotionally attached “for over 300 years”.

The real high risk event is that today's incredible, unjustifiable and unsustainable equity price levels, in the UK or anywhere else, will crash. Only their extreme-high levels temporarily prevent the private international banks from again declaring themselves “semi-bankrupt” and in need of national bailouts – because after all they do have “a national identity”. When it suits them.

The so-called debate on North Sea oil and gas has long flown over the cuckoo's nest. What are the risks? To be sure and certain Scotland exports a lot more oil than Kurdistan (or Libya on bad days and weeks) but it is high-cost oil drugged on and by high market prices for oil, and the world oil price is “looking for a correction” although ace speculator Andy Hall doesn't think so. Theoretically and rationally, an independent Scotland run by the SNP should cut back on oil production – but this would be “a horrendous event”. Almost high treason.

One thing is sure, the “No” movement is not going to be telling us about the Scottish oil “we have known and loved for 300 years”. The very detailed analyses and reports on British North Sea oil and gas by for example Euan Mearns, who himself sympathizes with the “No” movement, signal that it is almost impossible to scenarize a recovery in total production – at any oil price.

The real problem here as elsewhere is deliberate and sheer ignorance. The high risk event for North Sea oil is either a crash or erosion of the oil price to say $75 a barrel, investor retreat from the high cost North Sea province, and accelerated decline of output. Among the collateral damage, you might have guessed, will be the oil related assets-becoming-liabilities of the private international banks – becoming “Scottish” or “English” when it suits them.

None of this is particularly “No” vote or “Yes” vote oriented and flavored because it concerns that strange thing called the real world. At this late stage in the “independance debate” we cannot expect anything better.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2014 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

Andrew McKillop Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules