It came in the late afternoon of 28 September 1999. I was standing on the doorstep of the Sheraton Park Hotel in Washington D.C. The IMF (International Monetary Fund) annual general meeting was in full swing inside the hotel.
Suddenly people around me, a large crowd, started shouting; some were looking for colleagues, others were asking what’s happening? I too asked a familiar face nearby; I was told that the managing director of the IMF, Wim Duisenberg, had just made an announcement about central bank gold sales.
I rushed inside to find out more. The essence of the announcement was that 16 European central banks, with endorsement from the US Federal Reserve, the Bank of Japan, and the IMF, had agreed to limit their gold sales from their reserves to 400 tonnes collectively per annum, and that the agreement was to last for five years.
The then deputy governor of the Bank of England walked past me. He looked at me and grinned. He said to me: “I think they thought you would get angry again if they didn’t do something…”. That was a reference to the hard-fought campaign the World Gold Council, of which I was at the time the CEO, had mounted in the previous five months against the central banks’ sale of gold reserves.
Only a few weeks into my being appointed CEO the British government announced that it would sell half of its gold reserves. The IMF, too, was publicly debating the merits of selling a part of its gold holding. We at the WGC mounted a two-pronged protest: a very public press campaign and a serious negotiation behind the scenes with the British Treasury and the IMF as well as with other European central banks.
In the press campaign we ran a series of petitions in national newspapers and a call centre campaign against the planned gold sale. On day one the call centre, which had 20 agents answering calls, crashed in the first 20 minutes, such was the volume of calls, and the call centre had to be expanded. Well over 20,000 people signed a petition against the gold sale, in just three days. We sailed a launch up the Thames and parked it outside the House of Commons Terrace. It had a banner on it saying ‘Gordon Brown & Co: Scrap Metal Merchant’ with pots and pans painted in gold colour; that was on the front page of the leading national newspapers the next morning, giving a little merriment.
But more serious discussions were taking place with officials by the WGC team. Serious research work was being presented during these discussions behind closed doors. Both Duisenberg and the IMF (which announced the following day that it would abandon its planned gold sales) acknowledged in their statements that they had been influenced in their decisions by the work of the World Gold Council.
The Washington Agreement on Gold of 1999, as the agreement was named, put a floor under the gold price. The five-year agreement was renewed four times and it lasted until last year. Ever since that agreement, central banks of the world have been net buyers of gold to hold in their foreign exchange reserves.
Haruko Fukuda OBE
Former CEO and Board Director of the World Gold Council and investment banker with James Capel, Nikko, and Lazard. Haruko has served on the boards of a number of major international companies, including AB Volvo, and is a Non-Executive Director of several public companies.