MercoPress. South Atlantic News Agency

European central banks lost 40 billion USD with gold sales

The decision by central banks across Europe to sell gold reserves over the last ten years has left them 40 billion US dollars worse-off, the Financial Times reported Thursday.

Many countries copied the move by the Bank of England in 1999 to sell off a large amount of the precious metal and use the proceeds to buy assets offering a higher return, the FT reports. European central banks subsequently lost a large chunk of money which they would have otherwise earned.

The Bank of England sold its reserves when gold was at a low point in the cycle, with prices down at around 282 US dollars a troy ounce.

Since then the price of gold has risen dramatically, to a peak of 1,030 USD an ounce in March last year, as investors searched for a safe haven from economic problems across the globe. Today it is trading at around 912 USD an ounce.

The FT calculated that European banks eventually sold around 3,800 tons of gold, earning around 56 billion US dollars. They then gained another 12 billion via investments made using the gold.

However, the newspaper estimates they now stand around 40 billion USD worse off than if they had retained their reserves, thanks to the surge in price of the metal. Much of the gold sold has been bought by China's central bank over the last ten years. The FT said it had bought 659 tonnes of gold since 1999.