The price of gold is in free fall. The biggest drop in the price for 30 years – from US$1,580 (Dh5,803) an ounce last week to $1,380 (Dh5,068) at the time of writing – has wiped $30 billion off the value of global gold reserves. Various theories have been floated on the cause of this sudden depreciation. Some point to advice from Goldman Sachs to sell gold, others to rumours that Cyprus and other European countries are planning for a huge sale of the precious metal in the near future.
But why is gold such a significant metal? How did it become a universally recognised repository of value? And what role does it play in the modern global economy? Time to turn to the books.
• Go first to Peter Bernstein’s The Power of Gold: The History of an Obsession for a survey from prehistory to the present day. Bernstein says our prehistoric ancestors elevated gold – rare, beautiful, mysterious – to a substance imbued with spiritual significance – and so the -obsession began.
• The ancient historian Herodotus tells us that the Lydians were the first to use gold coins as a medium of exchange around 650BC. Read A History of Gold and Money by Pierre Vilar to learn how gold and money have always been intimately linked.
Stop off along the way to remember, too, the role that gold played in the foundation of the American dream. The California Gold Rush and the Coming of the Civil War (Vintage, Dh56) by Leonard Richards looks back to a seminal moment in the American story.
• In the 19th century, the currencies of both the US and UK were backed by gold: a citizen of the US could take his dollar to the central bank and receive gold in return. Read Golden Fetters: The Gold Standard and The Great Depression (OUP USA, Dh84) by Barry Eichengreen to learn how gold-backed currencies unravelled: President Nixon finally ended the guaranteed conversion of the dollar to gold in 1971.
• Of course, gold – still rare, still beautiful – is no less valuable for that. Indeed, if our money is no longer backed by gold, the question, surely, is not “What is the meaning gold?” but “What is the meaning of money?” Read the economic historian Niall Ferguson’s The Ascent of Money for some surprising answers.
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