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Gold bars in England showing their age

Some of the gold bars kept by the Bank of England to prop up the pound in times of economic turmoil are showing cracks and fissures, a newspaper reported on Saturday.

Experts say the deterioration could temporarily reduce the value of the country's 320 tonnes in gold reserves, which the central bank keeps on the government's behalf, the Times reported.

The British reserve is worth around ?4 billion (US$8 billion).

The bank confirmed the gold's deterioration in response to a Freedom of Information request by the trade journal Metal Bulletin.

The bank said it was working to establish how much of gold reserves were affected, but added that the proportion was likely to be small, the report said.

"This is not about purity, this is about physical appearance," the bank said.

The deterioration would only be an issue if the central bank needed to sell the gold. It would then have to be sent to a refiner so it could be melted down and turned into new bars, the report said.

The problem is mainly due to the age of the bars, most of which were imported from US in the 1930s and 1940s, the newspaper said, adding that many other central banks could soon face a similar problem.

The bank's reserves were now too small, relative to the size of Britain's ?1.2 trillion economy, for the cracks to be an issue, Jonathan Davis of Armstrong Davis Chartered Financial Planners said.
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