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Margaret Thatcher: Friend of Gold, Not Gold Bugs

09/04/2013 12:18 BST | Updated 09/06/2013 10:12 BST

DIVISIVE doesn't cover the half of it.

Quoting Francis of Assisi on bringing "harmony where there is discord" as she first entered No.10, Margaret Thatcher had already split the playground at my primary school. Her political sons have since mixed that football-club squabbling of red versus blue into a deep purple mush - first imperial under Tony Blair, now patrician under David Camerson and his coalition.

Squashing the unions, the entrenched vested interest of the 1970s, it's hard today not to see the irony of unintended consequences in her greatest free-market victory. We are now captured by the bankers instead - a swollen, morally bankrupt power seemingly bent on dragging us all into its slow decay.

Whatever your view of Margaret Thatcher and her legacy, she was a sure friend of gold. Long before she abolished exchange controls in 1979, she had barked against the Gold Coins Order of 1966 in Parliament, calling it "the final indignity" of the then-Labour government's economic mismanagement.

"Making it an offence for anyone who did not hold sovereigns on 27th April, 1966 to buy as much as one sovereign," she said in the Commons debate, "what an indictment of the Government. It was a ridiculous Order."

Friend of gold-owning freedom, however, the Iron Lady proved no friend to die-hard gold bugs. Those who switched in contrast to higher-yielding investments as the 1980s began enjoyed the strongest real returns in at least a century. Even cash in the bank paid four and five per cent over inflation for most of the 1980s. Abolishing exchange controls, the Thatcher administration also abolished the need for private savers to seek an escape.

Three years into the "financial repression" of sub-zero real interest rates, savers in the UK and elsewhere may well wish for such a champion of household thrift today. And the about-turn on exchange controls begun last month by Cyprus - a member of the single Euro currency whose birth pains provoked a good part of her political downfall - adds a final irony to the Iron Lady's legacy.