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Oh no, a book report! The Power Of Gold by Peter L. Bernstein
(10/17/00) Subtitled The History of an Obsession, this book covers our species' fascination with gold, from Biblical times right up to the present. Greed, warfare, domination, cruelty, and national pride are the major themes. It's a horror story all right, well told, and you'll never think about gold in the same way again.
First, you have to respect any book with favorable blurbs on the flyleaf by Paul A. Volcker, former chairman of the Federal Reserve, and Harvard’s esteemed John K. Galbraith. Coming from these gentlemen, critical praise actually means something, as opposed to the usual log-rolling blurbs you can read on the back of any new hardback.

Secondly, books about gold usually fit into one of three categories:

-Coffee-table books of beautiful gold art items, or

-Rehashed gold-rush stories and whoppers about the 49’ers, Pike’s Peak, or the Yukon, or

-Gold-bug books that explain how Western Civilization and the Gold Standard ended at the same time, and how to prepare for your survival in the upcoming economic chaos.

But Bernstein, who also authored Against the Gods: The Remarkable Story of Risk, along with eight other books in economics and finance, has written a book about gold that is like no other. He has made the story of gold understandable and very readable with this one-volume history of gold in the world. For instance, take the departed gold standard, so often mourned by the hard-money crowd. To learn how arbitrary, accidental, and short-lived its establishment was, read pages 283-327.

But the most remarkable thing that you learn from this book is that gold, the decorative and barbaric relic, so inferior to iron and copper in usefulness, has been such an integral part of our history for thousands of years.

“They wonder much to hear that gold, which in itself is so useless a thing, should be everywhere so much esteemed, that even men for whom it was made, and by whom it has value, should yet be thought of less value than it.” -Sir Thomas More, (1478-1535) “Utopia of Jewels and Wealth”

“About one hundred years ago, John Ruskin told the story of a man who boarded a ship carrying his entire wealth in a large bag of gold coins. A terrible storm came up a few days into the voyage and the alarm went off to abandon ship. Strapping the bag around his waist, the man went up on deck, jumped overboard, and promptly sank to the bottom of the sea. Asks Ruskin, ‘Now, as he was sinking, had he the gold? Or had the gold him?’” -from the prologue to The Power of Gold

“Get gold, humanely if possible, but at all hazards—get gold.” -King Ferdinand of Spain, 1511

The Power of Gold doesn’t spare the reader any of the ugliness of human history. In 53 BC, the legendary gold-hungry Roman “landlord from Hell” Crassus provokes a war with the Parthians. This is an unfortunate choice on his part, and at Carrhae his Roman foot-soldiers are slaughtered and routed by archers on horses and camels. The victorious Parthians capture Crassus and end his craving by pouring molten gold down his throat (page 46).

Maybe everyone but us remembers this the Plague story from their history lessons in school. In 1347, the Genoese were defending Feodosia against the Tartars, who decided to use a catapult to launch plague-stricken corpses amidst the Genoese – who, terror-stricken, fled back to Italy, thereby introducing the Black Plague to Europe (Page 97). Oddly enough, in the aftermath of the Plague’s decimation of the population of Europe, a curious economic period followed. The Black Death halved the population in many areas, but the gold supply remained constant – therefore the survivors ended up with twice the amount of money per person as before. This launched an era of unprecedented demand in Europe for material goods, especially imported luxuries!

Perhaps most tragic of all is the story of the Inca ruler Atahualpa, who had the misfortune to encounter the Spanish conqueror Francisco Pizarro in 1532. Atahualpa’s kingdom was turned upside-down, thousands of his people slain, and the gold treasures of the Incas melted down and carried back to Spain. The rapacious Pizarro finally saw fit to have Atahualpa tried in a kangaroo court, found guilty, and condemned to death.

Atahualpa, who had given over 5 tons of gold from throughout his kingdom to Pizarro, turned to the Spaniard and said:

“What have I done, or my children, that I should meet with such a fate? And from your hands, too, you, who have met with friendship and kindness from my people, with whom I have shared my treasures, who have received nothing but benefits from my hands!”

Pizarro had no reply. In typical conquistador fashion, the Inca ruler was tied to a stake, had a crucifix waved in his face, and was given a chance to convert to Christianity before being garroted (pp. 123-132).

But the saddest story from modern times is that of gold investors over the past two decades. Most of us are familiar with the fantastic modern run in gold prices, from the 1968 price of $35 per ounce, up to the January, 1980 peak of $850. What’s hard for us to remember today is that in 1980 equities were considered dead, and that the Dow Jones Industrials Average actually traded around 850 when gold was also about $850. So a theoretical $10,000 investment in stocks in 1980 would no doubt be worth over $100,000 today, enough to substantially enhace your retirement. The same amount invested in gold would bring less than $3500 today, or not quite enough to buy a good used car.

The whole story of gold is seemingly in this book – from Croesus to Sir Francis Drake, Roman galleys to “The Golden Hind,” The Bible to the Bretton Woods agreement, and the perfidy of Jay Gould to the deification of Alan Greenspan. Pick any chapter and jump right in – Bernstein writes with an engaging style that is decidedly non-stuffy.

If we have any quibble with this book at all, it’s the seeming short shrift it gives to 20th Century movements of gold, especially the relation of oil and gold in the past few decades. In a book that relates the story of an element that we dig out of the ground in order to re-bury it elsewhere, it seems the history of OPEC’s taking oil out of the ground and trading it for gold would have made a good chapter.

Incidentally, we had been noticing quite a bit of national advertising for this book, including a serialization of parts of it in “Worth” magazine. Then we picked up an ‘advanced, uncorrected proof’ copy of it on Ebay, and the back cover of this promo edition promises a $250,000 marketing campaign. Why, that’s over 900 ounces in gold worth of promotion! And even though we at Onlygold haven’t seen a gram of it, we heartily recommend this book as a whopping good read.

Published by John Wiley & Sons, Inc., the hardback edition is currently available at most bookstores and online booksellers.


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