The history of man and the metal
The Power of Gold: The History of an Obsession. By Peter L. Bernstein. Foreword by
Paul A. Volcker. John Wiley & Sons, Inc. 372 pp.
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Reviewed by Linda Park, MLIS, risk
management program coordinator, First National Bank Alaska Anchorage, Alaska. From the reviewer: "This review reflects my
own opinions about the book and its contents; it does not represent or reflect
the views of my employer."
* * *
The Power of Gold
was originally released in 2000. The late Peter Bernstein was not only an
renowned economist but an avid historian. In 2000 all was well in the world of
banking and finance, and then, the gold ball of finance dropped and became
tarnished (which real gold does not actually do) in the eyes of the public.
Much has changed since the boom days. You don't have to go
far to see shops set up to buy gold and silver, or to see their advertisements,
for instance. What better time in the world of banking and finance than 2012 to
again release the Power of Gold: The
History of an Obsession? This re-release includes an outstanding foreword
written by Paul Volcker.
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True confessions time: I am not by nature a history buff and
it was one of my worst subjects in school. I am not into reading long books
that I actually learn from, but read more to, in a word, escape. However, I
found myself totally absorbed in this book to the point of looking up
unfamiliar words, and reading some of research supplied in Bernstein's
extensive bibliography.
The amount of research Mr. Bernstein did for his book is
beyond mind-staggering. I felt as if I was transported with words from the
first discovery of gold as something of value and status in B.C. to current
times with gold at or close to an all-time high.
Gold and its pull
As a native Californian and now proud to be an Alaskan, I
have heard about gold mining all my life. Both of my states, at times in their
history, formed the center of various gold rushes. I think on the trials, the
errors, the elation, the despair. Is it any different in the current world of
finance and banking? I don't think so.
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In the author’s own
words…
“Hoarding is similar
to buying an insurance
policy. Like an
insurance
policy, hoarding gold
has a cost, for the
idle
metal earns nothing.
However, you sleep
better knowing that
you
hold some kind of
a hedge against the
chance that the
catastrophes you fear
may actually occur.”
--Peter Bernstein
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It is clear reading this book that gold is power, and is an
obsession. From the ancient rulers who adorned anything and pretty much
everything in gold at the expense of those who mined it, to the obsession of
those in the 1900s that hoarded it.
Bernstein has written that rarity, a very informative,
well-written, very-well-documented economic page turner. As he advances the
reader through the centuries, through the history of finance in the world, it
becomes clear that history does indeed repeat itself. Some section headings
help preview the d drama: "Prologue: The Supreme Possession"; "A Metal for All
Seasons"; "The Path to Triumph"; "The Descent from Glory"; and "Epilogue: The
Supreme Possession?" The chapter headings can be equally dramatic: "The Sacred
Thirst"; "The True Doctrine and the Great Evil"; and "World War Eight and the Thirty Ounces of Gold."
His footnote comments throughout the book are both
insightful and at times hilarious.
For all the gold in
Fort Knox
Later in this book, it appears from his writing and research
that the wealth of a country depends on the amount of gold it has. Does it
really? Keep reading.
In 2012 is gold now more of an adornment than a show of
wealth? Early on Bernstein states "In the process of doing research for this book,
I tried to obtain access to the U.S. official gold reserve at Fort Knox, Ky. I
was told it is an army base and that no visitors are allowed. The U.S. Treasury
reports that we own $11 billion in gold, but if nobody can get down there to
have a look, how do we know that the gold is really there?"
We Americans trust that it is. Just as we as bankers trust
in the banking system as a whole, though we all touch only a tiny part of it
individually.
Our world has gone from precious metal currency, to coin and
paper, to plastic. What is next?
As bankers, we are asked to do more with less, to be safe and
profitable, to understand and implement new and ever-changing regulations.
In the course of its long, detailed discussion, the book
prompts questions of what we may see in the future. It is thought provoking, to
say the least.
For example, as noted in the Forward by Mr. Volcker, the
price of gold is five times what it was a decade ago and 50 times the value it was in the 1960s.
The power of gold, it is a history and it is an obsession.
If you enjoyed this
review try these earlier reviews by Linda Park:
• The Credit Games:
Five Simple Steps, Better Credit For Life
RUFF: A Lost Dog
Tale: 5 Great Strategies to Manage Change at Work and Beyond
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[This article was posted on September 21, 2012, on the website of ABA
Banking Journal, www.ababj.com, and is copyright 2012 by the American
Bankers Association.]
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