Short circuit
THIS week, on the Chancellor's orders, the Bank of England sullenly unloaded another pile of the nation's gold. It would have done better to have kept the gold and lent it out. Gold interest rates (the rent the borrower pays) are now higher than the interest rates on yen and euros, the reserve assets that the Chancellor prefers to own. If gold is expen- sive to borrow, that implies that someone is painfully short of it. An obvious candidate is Martin Armstrong, whose offshore invest- ment company, Princeton Economics Inter- national, has just gone up in smoke. He is accused of defrauding Japanese investors of as much as $1 billion by selling them `Princeton Notes'. Princeton would not be the only corporate punter to be short of gold and long of dollar bonds, which have proved a dire investment. The conference circuit will miss Mr Armstrong, who was always ready to explain to an audience why gold was finished. It may see him off.
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