It’s indestructible – but can we always believe in (the UK trade figures with the disaggregated effect of the international trade in non-monetary) GOLD?
By GCRU Gold News on Tuesday, February 11 2020, 01:02 - Permalink
That is why tomorrow, for the first time, we will publish trade figures excluding gold (and the other precious metals mentioned above).
The BPM6 outlines two principles for how we treat gold. Firstly, it says that gold should be treated the same as any other commodity, so sales of gold are recorded as imports or exports: if a person in the UK sells gold to someone in France, this is a UK export and a French import.
The second principle in the international guidance is that imports and exports should be measured on the basis of economic ownership. This means we do not measure an import or export when it crosses a border, but rather when someone buys the good – even if it does not immediately leave the country. This will often be a better reflection of economic reality.
These two principles mean that when a foreign buyer purchases gold from a UK owner, it counts as an export even if the gold does not leave the UK. In addition, the gold that has been sold may not even be in the UK. Even if gold owned by a UK company is stored in Switzerland and sold to someone in France, it counts as a UK export to France.
This treatment of gold is out of line with how people might expect gold to be treated, or with economic reality. The more we have looked into it, the less convinced we are that the current treatment of gold really helps us understand the trends in the UK’s trade flows.