The Evening Standard reported this week that the Foreign Office is planning to reduce its formidable wine collection – which is said to be worth around £2 million. The cellar's prized wines are served to dignitaries and heads of state and reportedly include a bottle of Margaux and Latour 1961, worth £900 and £3,000 respectively. According to the Standard, “Controversy caused by the cellar at a time of public spending cuts" is behind the government sell off.
But doesn’t all of this sound vaguely familiar?
Think back, if you will, to May 1999. The Treasury announced its plans to auction off half of the UK’s gold reserves in order to diversify its portfolio and invest in foreign currencies. After initially causing the price of gold to fall to a 20-year low, the next decade saw prices leap to new highs – thus exposing the state’s rather expensive blunder. According to the Telegraph, the sell off, which took place between July 1999 and March 2002, procured £2.2 billion at an average price of $276.60 an ounce. Given that gold has now reached $1,377 per ounce, the reserves would have been worth five times as much today.
If the government’s previous sell offs are anything to go by, the current fine wine bull market may have somewhat further to run…