The smarter members of the BRW Rich List can recognise a bubble in a
market and take advantage by selling out to some over-exuberant buyer.
Brisbane property player and large Unitab shareholder Kevin
Seymour is a classic example as he sells off his portfolio. He was
joined by Melbourne’s billionaire Besen family who on Friday will
receive a cheque for $621 million from GPT in return for 50% and
management rights in the Highpoint shopping centre in Melbourne’s west.
This morning, another billionaire, Lang Walker, is out there declaring on the front page of The AFR
that his $1 billion-plus property portfolio is also up for sale. And
why not, given the stupid prices that various superannuation-driven
institutions are prepared to pay.
With the All Ordinaries breaking through 5000, the question of cashing
out some if not all of your investments is surely something that many
other Australians should be considering.
The Federal Government is certainly continuing its approach of selling
everything that isn’t nailed down and the decision to get rid of
Medibank Private appears perfectly timed given the reliance of that
business on equity returns.
However, the government and the Reserve Bank board should also
seriously consider dumping their remaining 80 million tonnes of gold. As this RBA table
shows, the market value of the holding has soared from $1.4 billion to
almost $2 billion over the 14 months to February and yesterday’s surge
past a record $800 an ounce valued the holding at $2.25 billion.
All this makes the decision to dump 167 tonnes for $2.43 billion in 1997 pretty stupid. It also makes this radio interview
John Howard did in Kalgoorlie on 19 April 1999 look different too. The
PM gloated that no sale “would have cost our federal reserves very
dearly”, the decision was “very intelligent” and “it was an astute
decision … given the movements in the value and the market price of
gold on world markets”.
Hmmm, we fetched $412 an ounce at the time. If we’d held on to the
stake until today we could have sold it for $4.7 billion, rather than
the $2.43 billion we fetched. Oh well, what’s a $2.3 billion
opportunity cost between friends.
Sure, we should consider what the RBA did with the money and any
returns it generated, but it was John Howard who was gloating on radio
about getting his timing right, so he should be asked today whether he
now has any regrets.
At the very least, the RBA should consider dumping the rest of their holding with gold at a record high.