As I type these words on the morning of Saturday 24 September 2011, the price of gold rests at $1,657.20 an ounce after having tumbled about $150 in the past week during a collapse in stock-market prices worldwide. Online “morning after” articles contain quotes from traumatized and chastened investors, including gold investors. But for my part, everything that I’ve read over the past 10 years or so leads me to believe that gold will soon resume its upward march in price. The gold market, as Timothy Green shows in his authoritative history The Ages of Gold, has existed for at least 5,000 years. The market has changed its form continually as human society and institutions have changed, but it is bigger and more pervasive today than it has ever been.
I first read about this book in 2010 in an online article by Adrian Ash of BullionVault.com. Having read an earlier work by Green, The New World of Gold, I felt encouraged to plunk down the relatively high price for this new work. It’s a weighty hardback printed on heavy, glossy paper, and contains a couple of dozen color plates of gold artifacts. It was available only direct from the publisher, GFMS Limited, a London-based metals research consultancy, and I had to fill out an online form in order to buy it, including, as I recall, a required field stating what company I was with (had to make one up). Doing a search on BookFinder.com, I see that used copies are available now, but the cheapest one today is Cdn$82.35. It seems to be aimed only at those who have a serious, probably professional, interest in gold.
I can say this: it amply repays such interest. Timothy Green has been a student of and writer on the world gold market since the 1960s. In The Ages of Gold he supplements his own knowledge of the 20th- and 21st-century trade with historical research spanning the entire length of human civilization. He scoured the world, visiting museums, talking to archaeologists, goldsmiths, and historians, and he compiled a bibliography of hundreds of texts in preparing this work. It represents a culminating achievement of a career devoted to investigating humanity’s passion for element 79.
The book is divided into four parts. Part 1 concerns the ancient world, 4000-1 BC; Part 2 is entitled “Empires AD 1-1200”; Part 3 is called “New Horizons 1200-1700”; and Part 4 is called “Gold standard: whence it came, where it went: 1700-2000”. The different focus of each part reflects how humanity’s relationship with gold has changed over time. Very roughly, Part 1 tells how gold changed gradually from a metal sought purely for its beauty and ornamental value to one that became itself a standard of value, notably with the invention of coinage in Lydia in the 6th century BC. Part 2 shows the role that gold (and silver) played in the building of empires, financing war and conquest. Part 3 looks at how gold contributed to the establishment of modern trade, finance, and banking. And finally, Part 4 is about the unplanned rise of the modern gold standard and its equally unplanned collapse in the 20th century.
Green writes with authority about every aspect of our relationship with gold: how it is (and was) mined, refined, worked, traded, stored, and coined. He knows this stuff and he knows the people who handle it, from Swiss bankers to South African miners to Arab smugglers to Vietnamese traders. He seems equally at home talking about the techniques of ancient goldsmiths and about intricacies of bimetallism in the monetary gyrations of modern Europe.
My own interest in gold is mainly as a monetary metal, so I found myself a bit less keen on the earlier parts of the book in so far as they dwelt on the details of smithing and of particular famous works of gold from the ancient world. But I was careful to read every word so that I would have the fullest possible context for appreciating Part 4 about the gold standard. It was well worth it, for Timothy Green gives the best account of the gold standard that I have come across—and I’ve been looking.
He shows how much that we associate with the gold standard arose by accident or caprice. The standard itself arose accidentally in Britain in the early 18th century when the government, in trying to fix the prices of gold and silver, caused silver to flow out of the country to India and China. Britain continued to regard itself as on a sterling standard long after silver had been replaced by gold as the main circulating currency. Only belatedly did they recognize the change and formally adopt gold as the basis of the pound.
The $35 price of gold that prevailed for much of the 20th century was chosen arbitrarily by Franklin Roosevelt on 31 January 1934 at one of his breakfast meetings with Secretary of the Treasury Henry Morganthau. Roosevelt had criminalized the private ownership of gold in America as almost his first act on taking office, and each day picked a price for it from a range suggested by Morganthau. In Green’s words, “This official price was to last until 1968 for the open market and until 1971 for inter-central bank dealings.”
I have read several accounts of how the gold standard staggered and then collapsed in the 20th century, but Green’s is the clearest and best. My only criticism of it is that he seems to regard the government monopoly of money and coinage as natural and normal, and to perceive the actions of the free market as disruptive. My ideal would be an account of the gold standard written by someone with Green’s depth of knowledge of gold, but from a free-market point of view.
Another criticism is that the book contains some typos and other copyediting errors. It’s a bit disappointing in a book of this size, authority, and expense.
But those are relative quibbles. This is a terrific book. The color plates of gold artifacts, from statues to necklaces to coins, are gorgeous. It’s important to note that the book is not about gold itself so much as about our relationship with it. But this is as it should be, unless you happen to be a metallurgist who’s looking for more about the physical properties of the metal itself.
Over all, if you’re interested in gold, then you need to read this book. And the more interested you are, the more you need to read it.