For my birthday, I have been given a gold rouble. It’s the thought that matters, of course — but which would you say was worth more: the rouble, or the gold? The promise to pay, or the precious metal? In the rouble’s homeland this question has always been a no-brainer. Ninety years ago Russia went to war, backed by gold reserves that were the biggest in the world. Five years later, when civil war had supervened, Admiral Kolchak was retreating down the Trans-Siberian Railway with a fleet of special trains, one of which held the reserves. By what may have been a coincidence, this train left the rails and was wrecked, and horsemen swooped out of the night and took the gold away. Some of the missing ingots were later identified on a truck in the Vatican’s private railway sidings. Much the same trick was repeated when the Soviet Union broke up. Several tons were found to be missing from the reserves. They may have been privatised by the secret police, who certainly had to investigate some vicious suicides. Even today, any sensible oligarch will keep his own reserves — enough, say, to buy a football club — in portable form. This is his insurance policy against falling out with his government and being put in the slammer, to read through his tax demands while his company disintegrates. Governments, in Russia and out, have been known to behave like this. They have ways of making their promises worthless, the simplest being to print more and more of them. No wonder that gold has come back into favour.
Pushing up above $450 an ounce, the price of gold is at its highest for years and must annoy Gordon Brown every time he sees it. This is the Chancellor who thought it would be clever to sell half the nation’s gold reserves. They were modest, by international standards — far smaller than France’s or Germany’s — and had been run down by Chancellors in an earlier Labour government, who had been taught that gold was obsolete. Forty years ago they were selling gold at $35 when the French, more astutely, were buying. This time the Chancellor chose to put our gold up for auction, but he would not have done much worse if he had shipped it down the Trans-Siberian Railway. The average price that he got — about $280 — was the lowest on offer for two decades and has never been seen since. His sale was the turning-point. It confirms my belief that in the legend on the dollar bill, In God We Trust, the letter ‘l’ is missing.
Sniff that martini
Gold’s strength is the flip-side of the dollar’s weakness. John Snow, the Virginia gentleman who is Secretary of the United States Treasury, may pledge his faith in his currency, but that, so the markets suspect, is only in the way of business, rather like bishops who have to sign up for the Church’s 39 Articles. Treasury Secretaries before him have been content to treat the dollar as every other country’s worry, this one has never seemed to have much leverage where it matters, and now the word in Washington tells us that he is on his way out. A by-product of all this is that the pound buys more dollars than at any time for 12 years, and this week we came within eight cents of my long-sought goal, the two-dollar martini. Michael Hughes, the sage of Baring Asset Management, believes that we shall get there with an olive or two to spare. Next year, he says, the pound could reach $2.30 — a rate not seen since the North Sea first ran black with oil. I would not wait for it. At two dollars to the pound we could afford to fly to New York and soak up martinis until our eyes bubbled. A pound here will buy pretty much what a dollar will buy over there. Live in hope.
Members of the club
Why pick on Alan? He was chief economic adviser at the Treasury until he found himself out of tune with the present regime and went off to run an Oxford college, and now he has been asked to inquire into the affair of David Blunkett and the nanny’s visa. This is Whitehall’s equivalent of the hospital pass, and he will handle it fairly and squarely, but it does not exactly explain why Sir Alan Budd should be on the receiving end. I infer that the Treasury Old Boys Club, that powerful connection, is at work, and that one senior member is helping another out. John Gieve, whose appointment this was, is the permanent secretary at the Home Office, but he made his career in the Treasury, and was the press secretary memorably blamed by Nigel Lawson when his tape recorder somehow failed to record. I am sure that Sir Alan will press the right buttons.
The Mouse’s Revenge
I permit myself an incorrect chuckle at Sean Harrigan’s fate. He has been running Calpers, the world’s largest and most priggish pension fund — from California, naturally — and takes an active interest in everything from greenhouse gases to boardroom excesses. Now some of his corporate enemies seem to have ganged up on him and forced him out. Walt Disney, he says, is exacting the Mouse’s Revenge. Oh, well, that’s activism for you. As Bertie Wooster’s Aunt Dahlia said about blackmail, all depends on whether you meet it coming or going.
The fat one
Every so often the telephone rings and a hearty recorded voice says: ‘Congratulations! You have won —’ At this point I tell the voice to ring off, just in case a human being is there to get the message. No good will come of this spurious good news. Doubts on these lines overtook one of my readers when she opened an official-looking letter, congratulating her on winning the big Spanish lottery — ‘El Gordo’, or the fat one. A lump sum payment of 615,810 euros had been reserved for her. All she had to do was to fill in the claim form and fax it back to a security company whose head office, for some reason, is in Italy — and, of course, to give details (but you guessed it) of her bank account. Never having bought a ticket for El Gordo, my reader suspects that no good will come of this win, and so do I. Wins like these are a Nigerian speciality but must have made their way to Europe.
Christopher Fildes’s book, A City Spectator, is published by Nicholas Brealey (£12.99).