This is a mildly amusing discourse from the recent Standing Committee on Economics: Deputy Chair Dr Andrew Leigh, ALP Member for Fenner: I want to conclude with a final question about what I think must rank as the worst market decision in Reserve Bank history: the decision in 1997 to sell 167 tonnes of gold when the world gold price was US$400 an ounce. The gold price is now about five times as high, around $2,000 an ounce. So, had Australia held onto that gold, it would be worth about US$9 billion more now than it was back then. Do you acknowledge that, in retrospect, that was a lousy decision? What will guide you in future as to the Reserve Bank's decision to buy or sell gold? RBA Deputy Governor Guy Debelle: While your price calculations are completely correct, there a couple of points I'd make. The proceeds from that sale generated returns subsequently. You're correct that if we sold it now it would be at a higher price, but in the meantime those proceeds allowed us to invest in US treasuries, which earned a rate of return—unlike gold, which earned a zero return. So we earned interest income in the intervening 20-odd years. That also has allowed us to pay higher dividends to the government. So one way you could think about this is that the result of the proceeds of the sale but also the interest income we've earned on those alternative assets that we've held. The dividends we paid to the government allowed them to do whatever they were going to do without having to borrow at a rate of around five or six per cent. I leave the compounding of that to you. But when you do that calculation the decision is not quite so dramatic as the way you just framed it. Dr Leigh: Do I take it there are no lessons that the Reserve Bank has drawn from that episode, then? Guy Debelle: The idea is always to sell an asset at its highest price. That is indeed a good thing to try to aim for. I think trying to predict the future of gold prices is difficult. It may have been a more sensible decision to turn around and take all those proceeds and invest them in Apple shares. We possibly would have earned an even higher rate of return. My point there is that the future is indeed uncertain, particularly future asset price movements, and hindsight is always the greatest investor. That is one lesson that one can always draw from such calculations. RBA Governor Philip Lowe: Perhaps I could make one final point: the Reserve Bank is not an investment bank. We don't hold a portfolio of assets to try and make the highest return, and we're not speculating on the prices of assets. We're holding these assets in the national interest, and the judgement we made back in the 1990s was that holding large stocks of gold in our vaults was probably not in the national interest. We're better off converting those gold holdings to foreign currency, because we need foreign currency for policy purposes: occasionally intervening in the foreign exchange market in the national interest—not very often, but sometimes we want the capability to do that—and generating a flow of income to the government, which holding US Treasuries, as Guy said, has done. So from the point of view of maximising the value of our assets, if that were our objective, I accept your criticism, but, from a public policy perspective, I think it was the right decision. Chair Tim Wilson, Liberal Member for Goldstein: Thank you, Deputy Chair. I take it you purchased gold in 1997 and you have held onto it dutifully thereafter because you think it's the right strategy. Just for Shane Wright at The Sydney Morning Herald, I need to clarify they were dishes in the drying rack. https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=COMMITTEES;id=committees/commrep/868db039-2384-4ce9-a502-1354709677d2/0001;query=Id:"committees/commrep/868db039-2384-4ce9-a502-1354709677d2/0000"