The Secret History of Gold comes out this week. Here for your viewing pleasure is a fim about gold based on the first chapter. “Gold will be slave or master”Horace In 2021, a metal detectorist with the eyebrow-raising name of Ole Ginnerup Schytz dug up a hoard of Viking gold in a field in Denmark. The gold was just as it was when it was buried 1,500 years before, if a little dirtier. The same goes for the jewellery unearthed at the Varna Necropolis in Bulgaria in 1972. The beads, bracelets, rings and necklaces are as good as when they were buried 6,700 years ago. In the Egyptian Museum in Cairo, there is a golden tooth bridge — a gold wire used to bind teeth and dental implants — made over 4,000 years ago. It could go in your mouth today. No other substance is as long-lasting as gold — not diamonds, not tungsten carbide, not boron nitride. Gold does not corrode; it does not tarnish or decay; it does not break down over time. This sets it apart from every other substance. Iron rusts, wood rots, silver tarnishes. Gold never changes. Left alone, it stays itself. And it never loses its shine — how about that? Despite its permanence, you can shape this enormously ductile metal into pretty much anything. An ounce of gold can be stretched into a wire 50 miles long or plate a copper wire 1,000 miles long. It can be beaten into a leaf just one atom thick. Yet there is one thing you cannot do and that is destroy it. Life may be temporary, but gold is permanent. It really is forever. This means that all the gold that has ever been mined, estimated to be 216,000 tonnes, still exists somewhere. Put together it would fit into a cube with 22-metre sides. Visualise a square building seven storeys high — and that would be all the gold ever. With some effort, you can dissolve gold in certain chemical solutions, alloy it with other metals, or even vaporise it. But the gold will always be there. It is theoretically possible to destroy gold through nuclear reactions and other such extreme methods, but in practical terms, gold is indestructible. It is the closest thing we have on earth to immortality. Perhaps that is why almost every ancient culture we know of associated gold with the eternal. The Egyptians believed the flesh of gods was made of gold, and that it gave you safe passage into the afterlife. In Greek myth, the Golden Apples of the Hesperides, which Hercules was sent to retrieve, conferred immortality on whoever ate them. The South Americans saw gold as the link between humanity and the cosmos. They were not far wrong. Gold was present in the dust that formed the solar system. It sits in the earth’s crust today, just as it did when our planet was formed some 4.6 billion years ago. That little bit of gold you may be wearing on your finger or around your neck is actually older than the earth itself. In fact, it is older than the solar system. To touch gold is as close as you will ever come to touching eternity. And yet the world’s most famous investor is not impressed. ‘It gets dug out of the ground in Africa, or some place,’ said Warren Buffett. ‘Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.’ He’s right. Gold does nothing. It does not even pay a yield. It just sits there inert. We use other metals to construct things, cut things or conduct things, but gold’s industrial uses are minimal. It is a good conductor of electricity, but copper and silver are better and cheaper. It has some use in dentistry, medical applications and nanotechnology. It is finding more and more use in outer space — back whence it came — where it is used to coat spacecraft, astronauts’ visors and heat shields. But, in the grand scheme of things, these uses are paltry. Gold’s only purpose is to store and display prosperity. It is dense and tangible wealth: pure money. Though you may not realise it, we still use gold as money today. Not so much as a medium to exchange value but store it. In 1970, about 27 per cent of all the gold in the world was in the form of gold coinage and central bank or government reserves. Today, even with the gold standard long since dead, the percentage is about the same. The most powerful nation on earth, the United States, keeps 70 per cent of its foreign exchange holdings in gold. Its great rival, China, is both the world’s largest producer and the world’s largest importer. It has built up reserves that, as we shall discover, are likely as great as the USA’s. If you buying gold or silver coins to protect yourself in these “interesting times” - and I urge you to - as always I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here. Ordinary people and institutions the world over use gold to store wealth. Across myriad cultures gold is gifted at landmark life events — births and weddings — because of its intrinsic value. In fact, gold’s purchasing power has increased over the millennia, as human beings have grown more productive. The same ounce of gold said by economic historians to have bought King Nebuchadnezzar of Babylon 350 loaves of bread could buy you more than 1,000 loaves today. The same gold dinar (roughly 1/7 oz) that, in the time of the Koran in the seventh century, bought you a lamb would buy you three lambs today. Those same four or five aurei (1 oz) which bought you a fine linen tunic in ancient Rome would buy you considerably more clothing today. In 1972, 0.07 ounces of gold would buy you a barrel of oil. Here we are in 2024 and a barrel of oil costs 0.02 ounces of gold — it’s significantly cheaper than it was fifty years ago. House prices, too, if you measure them in gold, have stayed constant. It is only when they are measured in fiat currency that they have appreciated so relentlessly (and destructively). In other words, an ounce of gold buys you as much, and sometimes more, food, clothing, energy and shelter as it did ten years ago, a hundred years ago or even thousands of years ago. As gold lasts, so does its purchasing power. You cannot say the same about modern national currencies. Rare and expensive to mine, the supply of gold is constrained. This is in stark contrast to modern money — electronic, debt-based fiat money to give it its full name — the supply of which multiplies every year as governments spend and borrowing balloons. As if by Natural Law, gold supply has increased at the same rate as the global population — roughly 2 per cent per annum. The population of the world has slightly more than doubled since 1850. So has gold supply. The correlation has held for centuries, except for one fifty-year period during the gold rushes of the late nineteenth century, when gold supply per capita increased. Gold has the added attraction of being beautiful. It shines and glistens and sparkles. It captivates and allures. The word ‘gold’ derives from the Sanskrit ‘jval’, meaning ‘to shine’. That’s why we use it as jewellery — to show off our wealth and success, as well as to store it. Indeed, in nomadic prehistory, and still in parts of the world today, carrying your wealth on your person as jewellery was the safest way to keep it. The universe has given us this captivatingly beautiful, dense, inert, malleable, scarce, useless and permanent substance whose only use is to be money. To quote historian Peter Bernstein, ‘nothing is as useless and useful all at the same time’. But after thousands of years of gold being official money, in the early twentieth century there was a seismic shift. Neither the British, German nor French government had enough gold to pay for the First World War. They abandoned gold backing to print the money they needed. In the inter-war years, nations briefly attempted a return to gold standards, but they failed. The two prevailing monetary theories clashed: gold-backed versus state-issued currency. Gold standard advocates, such as Montagu Norman, Governor of the Bank of England, considered gold to be one of the key pillars of a free society along with property rights and habeas corpus. ‘We have gold because we cannot trust governments,’ said President Herbert Hoover in 1933. This was a sentiment echoed by one of the founders of the London School of Economics, George Bernard Shaw — to whom I am grateful for demonstrating that it is possible to have a career as both a comedian and a financial writer. ‘You have to choose (as a voter),’ he said, ‘between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government… I advise you, as long as the Capitalist system lasts, to vote for gold.’ On the other hand, many, such as economist John Maynard Keynes, advocated the idea of fiat currency to give government greater control over the economy and the ability to manipulate the money supply. Keynes put fixation with gold in the Freudian realms of sex and religion. The gold standard, he famously said after the First World War — and rightly, as it turned out — was ‘already a barbarous relic’. Freud himself related fascination with gold to the erotic fantasies and interests of early childhood. Needless to say, Keynes and fiat money prevailed. By the end of the 1930s, most of Europe had left the gold standard. The US followed, but not completely until 1971, in order to meet the ballooning costs of its welfare system and its war in Vietnam. But compare both gold’s universality (everyone everywhere knows gold has value) and its purchasing power to national currencies and you have to wonder why we don’t use it officially today. There is a very good reason: power. Sticking to the discipline of the gold standard means governments can’t just create money or run defici
