Taxpayer 'lost £2bn' in gold sale

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Senior figures at Threadneedle Street expressed misgivings about the decision to auction 400 tonnes of bullion between 1999 and 2002, according to the Sunday Times.

Officials reportedly warned the Treasury in correspondence that there was a risk of losing money because the price of gold was at a low level.

However, there was no formal consultation and the Chancellor went ahead with the move.

Since the auctions the value of gold has trebled, allegedly leaving the public purse £2 billion worse off.

The Treasury issued a robust denial of the claims, insisting the decision had been scrutinised carefully and the taxpayer received value for money.

A spokesman said: "This is a decision the Government made in the proper way.

"It has been examined by the National Audit Office, who concluded that the Treasury had met its objective selling in a 'transparent and fair manner while achieving value for money'."

The spokesman added: "A large number of major countries made similar decisions to sell gold at the time including Belgium, Netherlands, Canada, Austria, Australia, Argentina, Czech Republic, Portugal, Sweden, Luxembourg, Switzerland and Malaysia."

The Bank's Governor at the time, Eddie George, had described the move as a "perfectly reasonable portfolio decision", according to the spokesman.