King Ibn Saud’s 35,000 British sovereigns – Gold’s historic under
King Ibn Saud’s 35,000 British sovereigns – Gold’s historic undervaluation versus oil
The Wikileaks/Financial Times revelations on significant gold buying interest in the Middle East — notably Iran’s central bank, Jordan’s central bank and Qatar’s sovereign wealth fund — brought to mind the story of Saudi Arabia’s King Ibn Saud and his sale of oil concessions to the major oil companies. In payment he received 35,000 British sovereigns — a coin many of you hold in your own sovereign wealth fund. The good king understood the difference between the value of gold and the value of a paper promise.
At the time (1933), the British sovereign’s value stood at $8.24 each, or $288,365 for the lot. The price of oil was about 85¢ a barrel, and a British sovereign could buy about ten barrels.
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