From The Australian:
The RBA revealed in July 1997 that over a six-month period, it had sold 167 tonnes, reducing Australia's reserves to just 80 tonnes. At this time, the value of its gold assets fell from $3.6bn to about $1.1bn.
The RBA's sales pushed the world gold price down to an 11-year low, returning just $2.4bn for the gold that was sold via a single broker engaged without a tender.
The same amount of gold would be worth about $7.4bn today.
The decision to sell the reserves was approved by then RBA governor Ian Macfarlane and then treasurer Peter Costello.
The paper justified the decision to dramatically reduce the bank's holdings by arguing that gold had been a poor investment, and that Australia need not worry about access to financial markets during another economic crisis.
Since this decision, the world financial system has suffered severe stress, first with the dotcom bust in 2000, then the 9/11 attack the following year and, more recently, the near collapse of the global financial system in 2008.
The spectacular rise in the price of gold in recent years shows that it is clearly playing a role in the GFC and its aftermath......read on