Every so often you encounter a chart that takes your breath away. This week I saw just such a graph…
By Ed Conway
The Times, London
Friday, February 14, 2020
Every so often you encounter a chart that takes your breath away. This week I saw just such a graph and I’m still struggling to get my head round it.
It depicts something which on the face of it sounds mundane — exports of gold from the UK — and it looks like a hockey stick.
You’ve probably seen a hockey-stick chart before. There’s the one Al Gore put up on the big screen in “An Inconvenient Truth” showing temperatures hovering at about the same level for century after century before shooting up in recent decades. Or the one of GDP going back to the dark ages: for most of history we subsisted on meagre earnings until the industrial revolution came along and catapulted GDP into the stratosphere.
The one this week has much the same shape. Not much of anything for month after month from 1998 when it begins until October 2019. Sure, there were occasional months when the amount of gold leaving British hands would hit a few hundred million pounds. Once or twice it ticks over a billion. But nothing like what occurs in November and December last year: in those months it skyrockets at a rate that doesn’t make any sense.
Until then, the monthly average of gold exports was L126 million. Then in November they leapt to L4 billion. In December they doubled to L8 billion.
To put it in context, that’s more, in those two months, than we typically export to any single country in the world. It is more than the annual GDP of Jamaica.
Britain does not mine any significant quantity of gold yet we are the world’s hub for the trade in physical bullion. This is something of an accident of history, in much the same way as we are also the world’s centre for the trade in fine wine, though we produce very little of the stuff ourselves. Yet gold bullion is so valuable that every time it changes hands it massively distorts the trade figures.
Consider: Britain has not achieved a goods trade surplus, which is where we export more goods than we import, in any single month since comparable records began more than two decades ago. Yet in December that astonishing leap in gold exports meant that the headline figures published this week showed Britain achieving its first goods trade surplus in modern times.
Ed Conway is economics editor of Sky News.
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