Leading Article: Hooray for the decline of the gold standard

WHEN GOVERNMENTS decide to sell, that is a sure signal for the investor to buy. Which is one reason to welcome the opening auction of the Government's gold reserves due today. The analysts, the banks and the jewellery business all believe that it will only propel the steady slide in gold prices - already down 10 per cent since the Government announced its intention of selling half its reserves only two months ago - ever faster downwards. Yet long experience suggests the opposite. When governments dabble in the markets, they invariably get it wrong.

Not that the Bank of England is wrong in its basic decision to sell, however clumsy the tactics in announcing a sale and programme of auctions. If anything, Eddie George, the Bank Governor, should have made the decision years ago when Canada set off a bandwagon of sales that now takes in the IMF and even Switzerland.

After centuries of worship, gold is no longer the symbol of economic strength, the seal of financial solidity. And all one can say is: hooray. The substitution of paper money for the solidity of gold may seem unsettling, if not downright dangerous, to those for whom brass in the hand is the only real currency. But it is also a supreme example of the democratisation of financial institutions. Anyone can hope to build up reserves of money. Only the rich and the powerful, and their secretive bankers in Zurich, could seek to control the physical resource.

There are losers, of course. Breaking into the vaults of the Bank of England, or even Fort Knox, will no longer be the pinnacle of a gentleman's crime. Nor are the jewellers too happy about seeing their basic commodity fall so far and so fast. The gold watch will soon be the birthright of every child in the land, but then that is a form of democratisation as well.