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 “independence debate” we cannot expect anything better.
