17. Global Money: Insiders and Outsiders

I once organised a private meeting there. It was between heads of major gold-mining companies and presidents/governors of major central banks. This was in 1999 when central banks were selling gold on the market, depressing its price. Commentators were urging them on, saying that gold was an outdated reserve asset and would continue to fall in value against the US dollar. This fall in the gold price was damaging gold-producing economies around the world. Thabo Mbeki, then deputy president of South Africa and designated successor to Nelson Mandela, chaired the meeting. It was an invitation that no central banker could decline however much they wanted to. So, people like Wim Duisenberg, who had just been appointed to be the first head of the European Central Bank, came along. There were only about 12 round the table. Mbeki introduced the meeting by laying out the damage that the falling gold price was doing to South Africa at the worst possible time only a few years after the end of apartheid. The central bankers had no answer. It worked. On September 26, 1999, Duisenberg himself announced the first central bank gold agreement. Participants promised not to sell more than a certain pre-defined amount of gold over a certain time period. The Guardian reported the decision: ‘In announcing the decision, the president of the European Central Bank, Wim Duisenberg, said the central banks were responding to the pleas of the World Gold Council, South African mining groups and the cause of stability’. The agreement transformed the gold market. The gold price rose from US$290 an ounce to US$1000 an ounce in the following ten years.

When I was at Cambridge university in the 1960s, the idea of a graduate going into business, banking or trade would send a collective shiver of horror through my group of friends, many of whom read English Literature in the spirit of the critic, FR Leavis (and nearly all of whom came from State schools). As Noel Annan, who was provost (head) of my college, later remarked of that generation: ‘most of them still found it difficult to understand that making yet more money could also be enjoyable’ (Annan 1990).