The Power of Gold: The History of an Obsession

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In this exciting new book, Peter L. Bernstein, who chronicled the evolution of risk in his recent bestseller, Against the Gods, tells the story of history's most coveted, celebrated, and inglorious asset: gold. From the ancient fascinations of Moses and Midas through the modern convulsions caused by the gold standard and its aftermath, gold has led many of its most eager and proud possessors to a bad end. Gold had them, rather than the other way around. And while the same cycle of obsession and desperation may ...
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Overview

In this exciting new book, Peter L. Bernstein, who chronicled the evolution of risk in his recent bestseller, Against the Gods, tells the story of history's most coveted, celebrated, and inglorious asset: gold. From the ancient fascinations of Moses and Midas through the modern convulsions caused by the gold standard and its aftermath, gold has led many of its most eager and proud possessors to a bad end. Gold had them, rather than the other way around. And while the same cycle of obsession and desperation may reverberate in today's fast-moving, electronically-driven stock markets, the role of gold in shaping human history is the striking feature of this tumultuous tale. Such is the power of gold.

This fascinating account begins with the magical, religious, and artistic qualities of gold and progresses to the invention of coinage, the transformation of gold into money, and the gold standard. The more important gold becomes as money, the more loudly it speaks of power—even more loudly than when it served as an entry to Heaven or a symbol of omnipotence. Ultimately, the book confronts the future of gold in a world where it appears to have been relegated to the periphery of global finance.

From the Bible to the Gold Rush era to modern day Fort Knox and beyond, unforgettable characters stride through these pages. Contemplate gold from the diverse perspectives of monarchs and moneyers, potentates and politicians, men of legendary wealth and others of more plebeian beginnings; from Asia Minor's King Croesus to Rome's noted speculator Crassus, to Byzantine emperors and humble miners, Venice's Marco Polo and Spain's Francisco Pizarro, to Charlemagne and Charles de Gaulle, Richard I and Richard Nixon, Isaac Newton and Winston Churchill, Britain's economists David Ricardo and John Maynard Keynes, and Christopher Columbus and the Forty-Niners. Perhaps most remarkable are the frantic speculators who pushed gold to $850.00 an ounce in 1980 just as their counterparts twenty years later drove Internet stocks to exorbitant heights.

Whether it is Egyptian pharaohs with depraved tastes, the luxury-mad survivors of the Black Death, the Chinese inventor of paper money, the pirates on the Spanish Main, or the hardnosed believers in the international gold standard like the United States' President Herbert Hoover, gold has been the supreme possession. It has been an icon for greed and an emblem of rectitude, as well as a vehicle for vanity and a badge of power that has shaped the destiny of humanity through the ages. As Bernstein muses, "The joke is that nothing is as useless and useful all at the same time."

Far more than a tale of romantic myths, daring explorations, and the history of money and power struggles, The Power of Gold suggests that the true significance of this infamous element may lie in the timeless passions it continues to evoke, and what this reveals about ourselves.

About the Author:
PETER L. BERNSTEIN combines the zest of a historian with the meticulous analytical powers of an economist. He is the author of seven books in economics and finance, including Against the Gods: The Remarkable Story of Risk and Capital Ideas: The Improbable Origins of Modern Wall Street. He is also President of Peter L. Bernstein, Inc., an economic consultancy to institutional investors, which he founded in 1973 after many years of managing billions of dollars in individual and institutional portfolios. He has lectured widely throughout the U.S. and abroad and has received the highest honors from his peers in the investment profession.

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Editorial Reviews

From Barnes & Noble
Our Review
Throughout history, no metal has inspired as much fascination, desire, reverence -- and just plain trouble -- as gold. People have risked their lives and plundered other societies for it, set it as a standard of value, and used it to gain power -- but for what? It is rare, difficult to mine, and too soft to be useful for anything other than adornment, but throughout the centuries, gold has not lost its luster for mankind. In a captivating new audiobook, Peter L. Bernstein explores this mesmerizing metal -- its history, and the history of those who have fallen under its spell -- and asks, what is the power of gold?

As in his acclaimed last book, Against the Gods, which examined how risk advanced science and enterprise into the world as we know it, Bernstein looks at gold throughout the ages, examining not only the character of the metal itself and mankind's reaction to it, but also how the hunger and reverence for it has actually propelled us into our social and economic situation of modern times. From the dental work of the Egyptians to the hard-bitten gold standard of the 20th century; from the hallowed halls of Kublai Kahn's mint, as witnessed by Marco Polo, to the stacks of gold bars housed by many nations in the Federal Reserve Bank of New York -- Bernstein describes in fascinating detail the economic, social, and religious impact gold has had around the world. Beginning with the uses of gold in global religions, Bernstein examines how the sheer beauty of gold first inspired the hearts of mankind. He also explores gold in our myth -- from Jason and the golden fleece to Midas and his golden touch.

Its more mystical qualities established, Bernstein then traces the evolution of gold as a monetary object and how it spawned the development of coin and paper money -- from the first pressed gold coin to dinars, duckets, and dollars. Along the way, we get fascinating glimpses of what men have been driven to for gold's sake, including Pisarro's and Columbus's explorations of the New World and the glorious bounty of the Incas and their rapid downfall in the face of the trade routes of the Spanish Main.

Ultimately, Bernstein leads us into modern times, for a good, long look at the role gold has played in the evolution of our modern global economy, how the gold standard was seen as a solution to international trade, or as William Jennings Bryan said, "a cross of gold" upon which mankind would be "crucified." And although the latter sections of the audiobook are more suited to readers with some background in finance or economics, it's still a fascinating look for any interested reader as well.

Asking important questions about greed and how far we will go for it, Peter L. Bernstein looks at gold as a propelling force throughout the ages, and what it has come to mean for us as an object of desire and an end in and of itself, rather than an object of beauty -- or a monetary means for satisfying the basic human needs. In The Power of Gold, he has written a spellbinding audiobook that -- for history buffs and financial kingpins alike -- is worth its weight in gold.

Elise Vogel is a freelance writer living in New York City.

Wall Street Journal
Mr. Bernstein has turned this story–not an obvious golden opportunity for even a writer of Mr. Bernstein's skill–into a real page-turner.
Business Week
Bernstein's volume is a tour de force with a satisfying conclusion: The characters in this drama prove themselves 'fools for gold, chasing an illusion.
New York Times
There are sugarplums throughout the book....The pleasure of the book is in its sheer number of unknown places and interesting episodes.
Boston Globe
The triumph of Peter Bernstein's book is that in the end you understand why and how it happened that the golden dog no longer barks. Bernstein is America's greatest living economic journalist."
Financial Times
Bernstein . . . does full justice to his material. Almost every chapter contains some detail to surprise or delight.
USA Today
The range of research evident throughout the book is staggering.... Bernstein's ear for the telling quote is pitch perfect.
Hard Currency
Gold is the ultimate in tangibility. Bright and shockingly heavy, for centuries the stuff was the physical manifestation of value. The opposite, in other words, of the Internet. Indeed, as Peter L Bernstein points out in his illuminating new book. The Power of Gold, as an exchange medium, gold isn't much different from the 4-ton stone coins famously spent by the Micronesian people of Yap. Bernstein recalls, as a young economist, being shown the basement full of bullion held by the New York Federal Reserve Bank on behalf of several European nations. When one country wanted to pay another, the Fed simply lugged a few bricks from one closet to another. Such efforts are clearly on the way out. The story of gold-and money-is one of increasing abstraction from bricks and coins to national chits, checks and now cybercash. This is just fine with the pragmatic Bernstein, author of the much- praised Against the Gods: The Remarkable Story of Risk. "The most striking feature of this long history," Bernstein writes, "is that gold led most of the protagonists of the drama into the ditch."

Bernstein vividly tells us how this happened, from the grisly death of Roman politician and bon vivant Marcus Licinius Crassus - down whose throat a vengeful (and ironic Parthian reportedly poured molten gold - to the gold-induced global economic death spiral that followed World War 1.

Along the way he treats us to interesting historical nuggets. "Cash" is the Tamil word for money, for instance, and was used to refer to some Chinese coins more than 2,000 years ago. Bernstein also reminds us that some scholars view L. Frank Baum's 1900 novel The Wizard of Oz as a parable condemning America's 1873abandonment of bimetallism-that is, a silver and gold standard - for the yellow brick road of an exclusively gold standard.

Boston Sunday Globe
It is hard enough trying to explain to American youths today what it's like being in the Army, or what's so unpleasant about inflation. Try telling them about gold. With war threatening last week in the Middle East and an attack on a US warship in the Persian Gulf, the price of gold barely twitched, climbing $4 to $277 an ounce in London last Thursday on the news. As one trader said, "Gold is the dog that no longer barks." Yet only 20 years ago the price of gold soared to S850 an ounce. Two or three pounds of it would buy a good house, and common stocks were priced so low that all the stocks listed in the New York Stock Exchange were worth no more than the sum total of all the world's monetary gold. By 1990, as paper assets boomed in value, gold had fallen to $400 an ounce; to $300 by mid-1997; and below that (though never lower than $250 ever since. Is 20 years long enough to declare the end of an epoch of several thousand years' duration in the history of the human race? That is the question at the bottom of "The Power of Gold: The History of an Obsession," a new book by Peter Bernstein. And the answer he gives is tentative. But the steady accretion of detail in this astonishing book gives the distinct impression that Bernstein thinks the epoch is ended indeed. Bernstein is America's greatest living economic journalist. He had the good fortune to take his economics courses at Harvard College (class of '40 just as the Keynesian Revolution was getting underway.
Economist
History of gold It defileth not WHAT is the eternal lure of gold? Peter Bernstein is rather unpoetic on the Subject. He tell us of its "stubborn resistance to oxidation, unusual density, and ready malleability", claiming that these simple physical attributes explain everything we would want to know about the element's romance. Perhaps he is right. But consider the words of an early 17th-century English merchant, Gerard de Malynes, saying more or less the same, but in quite different tones:

"Such is the qualitie of fine Gold that the fire doth not consume it...neither is it subject to any other Element...it is easily spread in leaves of marvellous thinnesse; in colour it resembleth the Celestiall bodies, it defileth not the thing it toucheth; it is not stinking in smell; the spirit of it can by art be extracted." Malynes had the bug, Mr Bernstein doesn't. Because gold's allure is rather lost on him, the author underplays the universality of its attraction, dwelling instead on the curse that has frequently befallen its admirers-from Crassus, a Roman plutocrat who died when Parthians poured molten gold down his throat, to Montagu Norman, the highly-strung governor of the Bank of England at the time of Britain's return to the gold standard in 1925.

Mr. Bernstein's sympathies lie rather with John Maynard Keynes, who famously denounced gold as the "barbarous relic", and with Benjamin Disraeli, who once declared that the "gold standard is not the cause, but the consequence of our commercial prosperity." Mr. Bernstein cites this comment more than once. But is it true? Could the credit and trade of the British empire have been established on any other monetary standard? The answeris probably not. Once gold protected people against the depredations of tyrants. However, the age of democracy has legitimised flat currencies. This explains why John Law failed to impose a paper currency in France in the early 18th century (this key moment in the history of gold is strangely overlooked by Mr. Bernstein. By the 20th century, gold had become an anachronism, as Keynes correctly recognized. It took others longer to release themselves intellectually from their "golden fetters". The populace of Britain suffered for this in the 1920s, as did the Americans in the early years of the 1930s depression. Today gold is simply an adornment. Long may it remain so.

Money Matters
This book is a delight. It is informative, thought provoking and relevant...April 2001
Daily Post Wales
This is a fascinating story. No one who even scans the pages will fail to be interested by this most fascinating of metals.
Nature
The story of gold over the last 5,000 years is a fascinating one, which Peter Bernstein relates with verve and wit.
Lady
This is a 24-carat book on a subject close to all our hearts.
Global Finance
There may have been more academically rigorous histories of gold written, but few more erudite or entertaining.
Scotsman
This is a fine piece of economic history. A well-documented, authoritative read, this is also entertaining. ...will enlighten & enthrall.
Scotland on Sunday
The research is excellent.
Shetland Times
Bernstein has done well to get such an exciting story together in one volume, and gold is fortunate to have such an erudite and fascinating storyteller. This book is easy to read and full of wonderful nuggets of information.
Risk
This book is an eloquent, brilliantly written historical review of how gold has influenced the evolution of monetary systems and trade, from early civilizations to the present day. Bernstein succeeds in presenting an enormous amount of research in a format as easy to read and as captivating as the best murder mystery.
Financial Times
A well worked history of the once mighty metal.
Sales Director
This is incredibly well researched and in-depth, a fascinating glimpse into the past and present of a commodity that has caused as much misery as it has happiness. This is truly a history of an obsession, and is well worth reading.
Time Out
Bernstein's meticulous account highlights the way in which man's struggle for gold has consistently stimulated economic thought and debate.
Glasgow & Edinburgh List
Bernstein has taken base elements - history, politics and economics - and created a gem. He writes with passion and a certain amount of irreverence; the numerous flippant asides keep the tone light and engaging. What could so easily have been a dreary tome in less capable hands is fascinating to the end.
Eastern Daily Press
This is altogether a fascinating read.
Irish Times
Bernstein writes with style and verve and all human life is in there. Thoroughly enjoyable.
Independent Friday Book
...readers with an interest in history or finance will welcome Bernstein's interesting history of gold and money in the West.
Good Book Guide
This accessible book will appeal to numismatists, economists and anyone with an interest in general history: it is both enjoyable to dip into and a good read from cover to cover.
Latest
Bernstein brings this story to life as a gripping, exciting and insightful work that combines many strands of history, politics and finance into a book of universal appeal.
New Scientist
...entertainingly tells the history of humankind's great obsession.
Sunday Times
...History, myth and metaphor combine to produce an entertaining study of the dangers inherent in bullion worship. ... The book's real charm lies in its detail.
Business Age
This is incredibly well researched and in-depth, a fascinating glimpse into the past and present of a commodity that has caused as much misery as it has happiness. This is truly a history of an obsession, and well worth reading.
Director
The book furnishes a pleasantly glided backcloth to the current fashion for economic history.
Focus
This book contains enough history, politics and finance to be of serious academic worth.
Publishers Weekly - Publisher's Weekly
"[T]he quest for gold" has been "gluttonous," says Bernstein, tracing the metal's impact on human myth and history: gold has inspired art, battles, conquests and discoveries, including Columbus's trip to the New World, where he hoped to secure enough gold to buy back the Holy Sepulcher from the Muslims. Bernstein makes clear the metal's virtues: it's so malleable that one ounce can be stretched into a 50-foot wire or pounded into 100 square feet, and it lasts forever (4,500-year-old Egyptian dental work, he notes, is good enough for today's mouths). Bernstein's gift for storytelling--with just the right touch of acerbic wit (on the myth of Jason and the Golden Fleece, he summarizes, "The story does not have a happy ending, because Jason was a compulsive social climber")--and his presentation of the paradox of how and why such a soft and simple metal has been afforded such value help make this work a winning account of human obsession, comprehensive, entertaining and enlightening. A knowledge of economics might help during the last third of the book, when Bernstein moves from ancient times to modern day and describes the economic chaos that followed WWI. By then gold was no longer the domain of legend; it had become a commodity, the standard against which powerful nations measure their wealth. But Bernstein, author of the bestselling Against the Gods: The Remarkable Story of Risk, livens up his intricate economic discussion with tales such as the one about the Harvard Business School professor who got into trouble with his dean for withdrawing his gold from the Harvard Trust Company during a gold standard-related panic in 1933. As the title promises, Bernstein does deliver a page-turning history of the not-so-heavy metal and its influence on people through the ages. $250,000 ad/promo; first serial to Worth. (Oct.) Copyright 2000 Cahners Business Information.|
Library Journal
A master historian at the peak of his art here recounts the timeless story of our obsession with gold. Mixing myth, legend, and historical fact, Bernstein (Against the Gods presents an enthralling look at the people, places, and events that have evoked desperation and frustration in human behavior. Starting with a broad palette of colorful characters, Pharaoh Hatshepsut, King Midas, Alexander the Great, Emperor Justinian, the Inca Emperor Atahualpa, Martin Luther, Kublai Khan, Sir Isaac Newton, and Charles De Gaulle, the author recounts the sequence of events that led to gold becoming the international monetary standard in the 19th Century only to fall to obscurity amid the collapse of the Bretton Woods System in 1971. At its root, this is the story of people so blinded in their pursuit of gold that they could not comprehend the difference between useless metal and real wealth. Recommended for both public and academic libraries.
Booknews
Though he proceeds in roughly chronological order, US Historian and economist Bernstein aspires neither to a complete history of the precious metal nor a systematic analysis of its role in economics and culture. Rather he explores those events and stories involving gold that most appeal to him as illustrative of the desperation and ultimate frustrations that have inflamed human behavior. Annotation c. Book News, Inc., Portland, OR (booknews.com)
Alan Abelson
The book is that rarity among popularized histories that neither insults the most informed reader nor dismays the least. Even more of a rarity is its cool, agnostic and knowledgeable treatment of a subject that too often has been claimed by apocalyptic types with loony agendas. And, rarest of all, perhaps, it's a financial book that doesn’t promise to make you rich. It might make you wiser, though.—The New York Times
Barrons
A lively, detailed account of civilization's star-crossed relationship with this most fascinating of metals. Undoubtedly the only economics book ever written that could honestly be described as fascinating.
Eric Schine
With the same lively writing and sharp focus that distinguished his previous work, Against the Gods: The Remarkable Story of Risk, Bernstein shows how gold emerged as the manifestation of mankind's longing for power, beauty, and immortality. This is world history on a grand scale, with gold appearing as a focal point at every major juncture.—Business Week
USA Today
The range of research evident throughout the book is staggering -- from Herodotus to Heilbroner -- and Bernstein's ear for the telling quote is pitch perfect.
Michelle V. Rafter
Gold is the ultimate in tangibility. Bright and shockingly heavy, for centuries the stuff was the physical manifestation of value. The opposite, in other words, of the Internet. Indeed, as Peter L. Bernstein points out in his illuminating new book, The Power of Gold, as an exchange medium, gold isn't much different from the 4-ton stone coins famously spent by the Micronesian people of Yap. Bernstein recalls, as a young economist, being shown the basement full of bullion held by the New York Federal Reserve Bank on behalf of several European nations. When one country wanted to pay another, the Fed simply lugged a few bricks from one closet to another. Such efforts are clearly on the way out. The story of gold - and money - is one of increasing abstraction from bricks and coins to national chits, checks and now cybercash. This is just fine with the pragmatic Bernstein, author of the much-praised Against the Gods: The Remarkable Story of Risk. "The most striking feature of this long history," Bernstein writes, "is that gold led most of the protagonists of the drama into the ditch." Bernstein vividly tells us how this happened, from the grisly death of Roman politician and bon vivant Marcus Licinius Crassus - down whose throat a vengeful (and ironic) Parthian reportedly poured molten gold - to the gold-induced global economic death spiral that followed World War I. Along the way he treats us to interesting historical nuggets. "Cash" is the Tamil word for money, for instance, and was used to refer to some Chinese coins more than 2,000 years ago. Bernstein also reminds us that some scholars view L. Frank Baum's 1900 novel The Wizard of Oz as a parable condemning America's 1873 abandonment of bimetallism - that is, a silver and gold standard - for the yellow brick road of an exclusively gold standard. (The hard-money East was pro-gold, while debt-laden farmers in places like Kansas advocated the looser monetary policies associated with plentiful silver.) Interestingly, Bernstein also observes that gold itself was an early medium used to abstract worth, citing the Lydian invention of gold coins around 650 B.C. "The transformation of gold into money democratized it," he writes. "Thanks to coinage, the ownership and use of gold after Lydia was no longer a royal prerogative. It was now literally in the hands of common citizens, even if only the most wealthy." That was, of course, the beginning of the end for gold, since its weight and relative scarcity would make it grossly insufficient as currency in the technological age of mass affluence that was to come. Growth and democracy inevitably required more money and risk-taking than gold could support. As the author notes, "Financial rectitude, though much admired, has never been a sure road to prosperity." Although written with verve, The Power of Gold is not a light read. It assumes a little too much understanding on the part of the reader of the complex interplay between foreign exchange, interest rates, price levels and fiscal policy, and gets bogged down for too long in the feuds of the Middle Ages. If you want a more rounded and accessible work, try Jack Weatherford's The History of Money: From Sandstone to Cyberspace. But Bernstein has other fish to fry. Perhaps in keeping with his earlier book, his message here is that there is no real haven from uncertainty in life. Gold is no safe harbor, and in the longest of runs the dollar is unlikely to be safe, either. To Bernstein, though, abandoning gold has at least meant growing up and getting comfortable with the risks of life. Wars, plagues and economic turmoil drove people to gold in the past. The question now is whether the risks posed by networked computers, hackers, esoteric financial derivatives and the sheer velocity of money will do the same.
From the Publisher
History of gold

It defileth not

WHAT is the eternal lure of gold? Peter Bernstein is rather unpoetic on the Subject. He tell us of its "stubborn resistance to oxidation, unusual density, and ready malleability", claiming that these simple physical attributes explain everything we would want to know about the element's romance. Perhaps he is right. But consider the words of an early 17th-century English merchant, Gerard de Malynes, saying more or less the same, but in quite different tones:

"Such is the qualitie of fine Gold that the fire doth not consume it...neither is it subject to any other Element...it is easily spread in leaves of marvellous thinnesse; in colour it resembleth the Celestiall bodies, it defileth not the thing it toucheth; it is not stinking in smell; the spirit of it can by art be extracted."

Malynes had the bug, Mr Bernstein doesn't. Because gold's allure is rather lost on him, the author underplays the universality of its attraction, dwelling instead on the curse that has frequently befallen its admirers-from Crassus, a Roman plutocrat who died when Parthians poured molten gold down his throat, to Montagu Norman, the highly-strung governor of the Bank of England at the time of Britain's return to the gold standard in 1925.

Mr. Bernstein's sympathies lie rather with John Maynard Keynes, who famously denounced gold as the "barbarous relic", and with Benjamin Disraeli, who once declared that the "gold standard is not the cause, but the consequence of our commercial prosperity." Mr. Bernstein cites this comment more than once. But is it true? Could the credit and trade of the British empire have been established on any other monetary standard? The answer is probably not. Once gold protected people against the depredations of tyrants. However, the age of democracy has legitimised flat currencies. This explains why John Law failed to impose a paper currency in France in the early 18th century (this key moment in the history of gold is strangely overlooked by Mr. Bernstein). By the 20th century, gold had become an anachronism, as Keynes correctly recognised. It took others longer to release themselves intellectually from their "golden fetters". The populace of Britain suffered for this in the 1920s, as did the Americans in the early years of the 1930s depression. Today gold is simply an adornment. Long may it remain so.

--The Economist, October 14-20th, 2000 Edition

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Product Details

  • ISBN-13: 9780375416088
  • Publisher: Random House Audio Publishing Group
  • Publication date: 10/3/2000
  • Format: Cassette
  • Edition description: Abridged, 4 cassettes, 6 hrs.
  • Product dimensions: 1.24 (w) x 4.42 (h) x 1.20 (d)

Meet the Author

PETER L. BERNSTEIN combines the zest of a historian with the meticulous analytical powers of an economist. He is the author of seven books in economics and finance, including the best-selling Against the Gods: The Remarkable Story of Risk and Capital Ideas: The Improbable Origins of Modern Wall Street. He is also President of Peter L. Bernstein, Inc., an economic consultancy to institutional investors, which he founded in 1973 after many years of managing billions of dollars in individual and institutional portfolios. He has lectured widely throughout the U.S. and globally and has received the highest honours from his peers in the investment profession.

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Read an Excerpt

THE POWER OF GOLD

THE HISTORY OF OBSESSION


Prologue

The Supreme Possession

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?"

This book tells the story of how people have become intoxicated, obsessed, haunted, humbled, and exalted over pieces of metal called gold. Gold has motivated entire societies, torn economies to shreds, determined the fate of kings and emperors, inspired the most beautiful works of art, provoked horrible acts by one people against another, and driven men to endure intense hardship in the hope of finding instant wealth and annihilating uncertainty.

"Oh, most excellent gold!" observed Columbus while on his first voyage to America. "Who has gold has a treasure [that] even helps souls to paradise." As gold's unquenchable beauty shines like the sun, people have turned to it to protect themselves against the darkness ahead. Yet we shall see at every point that Ruskin's paradox arises and challenges us anew. Whether it is Perseus in search of the Golden Fleece, the Jews dancing around the golden calf, Croesus fingering his golden coins, Crassus murdered by molten gold poured down his throat, Basil Bulgaroctonus with over two hundred thousand pounds of gold, Pizarro surrounded by gold when slain by his henchmen, Sutter whose millstream launched the California gold rush, or modern leaders such as Charles de Gaulle who deluded themselves with a vision of an economy made stable, sure, and superior by the ownership of gold--they all had gold, but the gold had them all.

When Pindar in the fifth century BC described gold as "a child of Zeus, neither moth or rust devoureth it, but the mind of man is devoured by this supreme possession," he set forth the whole story in one sentence. John Stuart Mill nicely paraphrased this view in 1848, when he wrote "Gold thou mayst safely touch; but if it stick/Unto thy hands, it woundeth to the quick." Indeed, gold is a mass of contradictions. People believe that gold is a refuge until it is taken seriously; then it becomes a curse.

Nations have scoured the earth for gold in order to control others only to find that gold has controlled their own fate. The gold at the end of the rainbow is ultimate happiness, but the gold at the bottom of the mine emerges from hell. Gold has inspired some of humanity's greatest achievements and provoked some of its worst crimes. When we use gold to symbolize eternity, it elevates people to greater dignity--royalty, religion, formality; when gold is regarded as life everlasting, it drives people to death.

Gold's most mysterious incongruity is within the metal itself. It is so malleable that you can shape it in any way you wish; even the most primitive of people were able to create beautiful objects out of gold. Moreover, gold is imperishable. You can do anything you want with it and to it, but you cannot make it disappear. Iron ore, cow's milk, sand, and even computer blips are all convertible into something so different from their original state as to be unrecognizable. This is not the case with gold. Every piece of gold reflects the same qualities. The gold in the earring, the gold applied to the halo in a fresco, the gold on the dome of the Massachusetts State House, the gold flecks on Notre Dame's football helmets, and the gold bars hidden away in America's official cookie jar at Fort Knox are all made of the same stuff.

Despite the complex obsessions it has created, gold is wonderfully simple in its essence. Its chemical symbol AU derives from aurora, which means "shining dawn," but despite the glamorous suggestion of AU, gold is chemically inert. That explains why its radiance is forever. In Cairo, you will find a tooth bridge made of gold for an Egyptian 4500 years ago, its condition good enough to go into your mouth today. Gold is extraordinarily dense; a cubic foot of it weighs half a ton. In 1875, the English economist Stanley Jevons observed that the £20 million in transactions that cleared the London Bankers' Clearing House each day would weigh about 157 tons if paid in gold coin "and would require eighty horses for conveyance." The density of gold means that even very small amounts can function as money of large denominations.

Gold is almost as soft as putty. The gold on Venetian glasses was hammered down to as little as five-millionths of an inch--a process known as gilding. In an unusually creative use of gilding, King Ptolemy II of Egypt (285-246 BC) had a polar bear from his zoo lead festive processions in which the bear was preceded by a group of men carrying a gilded phallus 180 feet tall. You could draw an ounce of gold into a wire fifty miles in length, or, if you prefer, you could beat that ounce into a sheet that would cover one hundred square feet.

Unlike any other element on earth, almost all the gold ever mined is still around, much of it now in museums bedecking statues of the ancient gods and their furniture or in numismatic displays, some on the pages of illustrated manuscripts, some in gleaming bars buried in the dark cellars of central banks, a lot of it on fingers, ears, and teeth. There is a residue that rests quietly in shipwrecks at the bottom of the seas. If you piled all this gold in one solid cube, you could fit it aboard any of today's great oil tankers; 8 its total weight would amount to approximately 125,000 tons, 9 an insignificant volume that the U. S. steel industry turns out in just a few hours; the industry has the capacity to turn out 120 million tons a year. The ton of steel commands $550--2¢ an ounce--but the 125,000 tons or so of gold would be worth a trillion dollars at today's prices.

Is that not strange? Out of steel, we can build office towers, ships, automobiles, containers, and machinery of all types; out of gold, we can build nothing. And yet it is gold that we call the precious metal. We yearn for gold and yawn at steel. When all the steel has rusted and rotted, and forever after that, your great cube of gold will still look like new. That is the kind of longevity we all dream of.

Stubborn resistance to oxidation, unusual density, and ready malleability--these simple natural attributes explain all there is to the romance of gold (even the word gold is nothing fancy: it derives from the Old English gelo, the word for "yellow"). This uncomplicated chemistry reveals that gold is so beautiful it was Jehovah's first choice for the decoration of his tabernacle: "Thou shalt overlay it with pure gold," He instructs Moses on Mount Sinai, "within and without shalt thou overlay it, and shalt make upon it a crown of gold round about." That was just the beginning: God ordered that even the furniture, the fixtures, and all decorative items such as cherubs were also to be covered in pure gold.

God issued those orders many thousands of years ago. What is the place of gold in the modern world of abstract art, designer jeans, complex insurance strategies, computerized money, and the labyrinths of the Internet? Does gold carry any significance in an era where traditions and formality are constantly crumbling beyond recognition? In a global economy managed increasingly by central bankers and international institutions, does gold matter at all?

Only time can tell whether gold as a store of monetary value is truly dead and buried, but one thing is certain: the motivations of greed and fear, as well as the longings for power and for beauty, that drive the stories that follow are alive and well at this very moment. Consequently, the story of gold is as much the story of our own time as it is a tale out of the past. From poor King Midas who was overwhelmed by it to the Aly Khan who gave away his weight in gold every year, from the dank mines of South Africa to the antiseptic cellars at Fort Knox, from the gorgeous artworks of the Scythians to the Corichancha of the Incas, from the street markets of Bengal to the financial markets in the City of London, gold reflects the universal quest for eternal life--the ultimate certainty and escape from risk.

The key to the whole tale is the irony that even gold cannot fulfill that quest. Like Ruskin's traveler jumping off the boat, people take the symbolism of gold too seriously. Blinded by its light, they cashier themselves for an illusion.

The following chapters proceed in roughly chronological order, but the story is neither a complete history of gold nor a systematic analysis of its role in economics and culture; detailed histories of money and banking abound. Instead, I explore those events and stories involving gold that most appealed to me because they display the desperation and ultimate frustrations that have inflamed human behavior. Beginning with the magical and religious attributes of gold, the history proceeds to the transformation of gold into money. As that transformation progresses, however, we shall never lose sight of the magical qualities of gold or the ironies of its impact on humanity.

My hope is that what I have chosen to include will illuminate and occasionally infuriate the reader about how the fascination, obsession, and aggression provoked by this strange and unique metal have shaped the destiny of humanity through the ages.

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Table of Contents

A METAL FOR ALL SEASONS.
Get Gold at All Hazards.
Midas's Wish and the Creatures of Pure Chance.
Darius's Bathtub and the Cackling of the Geese.
The Symbol and the Faith.
The Symbol and the Faith.
Gold, Salt, and the Blessed Town.
The Legacy of Eoba, Babba, and Udd.
The Great Chain Reaction.
The Disintegrating Age and the Hateful Withered Hag.
The Sacred Thirst.
THE PATH TO TRIUMPH.
The Fatal Poison.
The Asian Necropolis and Hien Tsung's Inadvertent Innovation.
The Great Recoinage and the Last of the Magicians.
The True Doctrine and the Great Evil.
The Cursed Discovery.
The Badge of Honor.
The Most Stupendous Conspiracy and the Endless Chain.
THE DESCENT FROM GLORY.
The End of the Epoch.
The Transcending Value.
World War Eight and the Thirty Ounces of Gold.
Epilogue: The Supreme Possession?
Bibliography.
Index.
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Interviews & Essays

Exclusive Author Essay
Gold: The Passionate Journey by Peter L. Bernstein

Ask somebody today how they feel about gold, and the response is likely to be a yawn. In 1996, when a friend suggested that I should write a book about gold, I also reacted with a yawn. Why, I asked myself, should I spend my efforts on an asset so obsolete that even the Swiss National Bank and the Bank of England want to liquidate their holdings of it? But then I recalled it was not always thus, even in our own time. Quite the contrary.

When the gold panic climaxed in January 1980 at $850 an ounce, gold was so triumphant that the value of all the monetary gold in the world exceeded the value of all the stocks listed on the New York Stock Exchange. During the 15 years or so of economic darkness that led up to that crazy moment, politicians and central bankers appeared helpless before the onslaught of worldwide inflation, spurring more and more people to act on the old proverb, "We have gold because we cannot trust governments." Indeed, gold is unique as the only stateless money, for it is issued by no government. The cynical gold bugs were shouting that gold was the sole hedge against inflation, the gnomes of Zurich were relentlessly attacking the dollar, and President de Gaulle of France was exploiting gold -- "gold that never changes...that is eternally and universally accepted," as he put it -- to bring the United States of America to its knees before him.

That was my vivid memory about gold, and it was enough to convince me that this was a project worth pursuing. History as dramatic as this always contains valuable lessons for the present. As I pursued my research into the more distant past, however, I discovered that the story of gold was far bigger than the awful events of the recent past. Throughout history, people have become intoxicated, obsessed, haunted, humbled, and exalted over these gleaming but basically useless pieces of metal.

When the Greek poet Pindar in the 5th century B.C. described gold as "a child of Zeus, neither moth or rust devoureth it, but the mind of man is devoured by this supreme possession," he set forth the whole story in one sentence. From Egyptian pharaohs with depraved tastes to the luxury-mad survivors of the Black Death, from the Chinese inventor of paper money to the pirates on the Spanish Main, and most especially the hard-nosed believers in the international gold standard like the inscrutable Montagu Norman of the Bank of England, gold was the supreme possession.

The history of gold is in fact the history of the world as seen through the prism of this strange stuff. Over some 5,000 years, gold has motivated entire societies, torn economies to shreds, and determined the fate of governments. Gold has stirred the passion for power and glory, for beauty and security, and even for immortality. It has been an icon for greed and an emblem for rectitude, as well as a vehicle for vanity and a badge of power that shaped the destiny of humanity through the ages. No other object has commanded so much veneration over so long a period of time. Even Jehovah, according to the Book of Genesis, instructed Moses to build a tabernacle of "pure gold" in his honor.

Something that powerful deserves a lot more than a yawn.

I began The Power of Gold with an anecdote recounted by the famous Victorian art critic, John Ruskin, who tells of a man who boarded a ship carrying his entire wealth in a large bag of gold coins. When a terrible storm comes up and the order goes out to abandon ship, this man grabs his gold, jumps overboard, and promptly sinks to the bottom of the ocean. Ruskin asks, "Had he the gold, or had the gold him?" The gold had the greedy fools who paid $850 for it in January 1980, all right, but that was just one example. The big theme that runs through this history is that gold, in almost every case, shows how not to lead your personal life and how not to manage a nation's financial affairs.

Along the way to that conclusion, we meet a wide variety of colorful, admirable, hateful, pathetic, and appealing characters, all driven by the passion for gold. Early in the story, we meet Midas, whose life was a lot more interesting than the familiar fable would have it, as well as Croesus, who was in reality as rich as the Croesus of legend but not as lucky with his golden wealth as he wanted to believe. The Roman speculator Crassus was murdered by having molten gold poured down his throat, and that is just one of the bloody episodes in this history. We encounter Byzantine emperors with absolute power but obsessed by hoarding gold, as well as humble miners with no choice but to exhaust their lives by extracting it from the earth. Radical innovations in the art of transportation -- including the camel -- carried the gold from far lands into Europe. Indeed, the great explorations of the 15th century, from Africa to Asia to the New World, were primarily inspired by the unquenchable thirst for gold. Francisco Pizarro, the conqueror of the Incas of Peru, exhibited a cruelty as extraordinary as his courage and leadership, but Spain failed in spectacular fashion to capitalize on the fabulous golden wealth that Pizarro and the other conquistadores shed so much Indian blood to acquire in America. Charlemagne and Charles de Gaulle both tried to make their mark in history by accumulating gold, although Charlemagne at least launched the beautiful art of illustrated manuscripts in Europe. Richard I (the Lionhearted) was ransomed from captivity in 1192 with the largest pile of gold ever accumulated up to that moment, but the other Richard in our story -- Richard Nixon -- was the man who had the courage in 1971 to cut the umbilical cord linking the U.S. dollar to the gold standard. Asian monarchs and Arab potentates shaped their policies in relation to their stocks of gold, while Isaac Newton and Winston Churchill both tried their best to understand it and place a value upon it. The great English economist David Ricardo revered gold; the equally great English economist John Maynard Keynes considered it a barbarous relic. The Forty-niners set an example of impatient greed that was later emulated by the speculators who pushed gold to $850 an ounce in 1980. The managers of the gold standard in the 1920s and 1930s led the world into a series of disasters that read like a horror movie you watch incredulously even though you know the finale. Can you believe that doubling interest rates and slashing government spending amid a sea of bank failures and astronomical levels of unemployment was the standard method for conducting monetary and fiscal policy in those days?

In the end, the story is a morality tale. I was motivated to look into this matter at the vary beginning by the recollection of how much I hated those goldbugs of the 1960s and 1970s -- including General de Gaulle. Their obsession with gold was the rejection of everything good that organized society stands for and is capable of accomplishing. The Golden Calf that Moses found his people worshipping was the cause of the greatest temper tantrum in history, and rightly so. Anything that favors hoarding over sharing degrades morality and concern for others. The pursuit of eternity will not be satisfied by gold, or by anything else we choose to replace gold -- and that includes the stock market. Gold (or its proxies) as an end in itself is meaningless. Hoarding does not create wealth. Gold makes sense only as a means to an end: to beautify, to adorn, to exchange for what we want and need.

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  • Anonymous

    Posted January 24, 2003

    My kind of history

    I have always been fascinated by events or "things" that change the world. This book is as I expected: scholarly, insightful, and full of information. The all-too-often boring history of the world becomes fascinating in the author's adept hands. What I did not expect was Mr. Bernstein's wonderful sense of humor. His recounting of the legend of Jason and the Golden Fleece is very funny. Highly recommended.

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