Top positive review
41 people found this helpful
Very good, but one major error
on 19 August 2014
I really liked this book. It goes as close as anything I have seen to defining 'money' from first principles. Its recommendations at the end for what to do with your wealth (if you have any) -- gold, fine art, land, cash -- seem to me cogent and well thought out.
But I see one major error: so bad that it falls into the category of 'clanger' and causes a niggle of doubt about everything else in the book. Referring to sterling parity upon return of the UK to the Gold Standard in 1925, Mr Rickards says this: "Chancellor of the Exchequer Winston Churchill chose to return sterling to gold at the prewar rate equivalent to £4.86 per ounce. This is simply wrong. It gets worse. On the same page, the author says this: "An exchange rate equivalent to £7.50 per ounce would have been a more realistic peg".
The truth is that Churchill returned sterling to gold at a parity of £1 = US$4.86 (hence, superficially, the confusion with £4.86)
In 1914 (to which the 1925 Gold Standard Act mandated the return of the UK's monetary parity):
£1 = 113 grains of pure gold (one grain = .06479891 grams)
$1 = 23.22 grains of gold
Therefore £1 = $4.8664944
Also in 1914:
One 'standard ounce' (11/12 pure or 22 carat) gold = £3 17s 10 and 1/2 d = (decimalised) £3.89375
One troy ounce of pure gold therefore = £4.24772727
At the $4.8664944 parity, one troy ounce of pure gold therefore = $20.671541.
Confusion over. But this is research Mr Rickards should have done; in addition the fact that it is widely held that at $4.86, sterling was overvalued by about 10%. By this calculation £1 should have been set at about $4.40.
I still give Mr Rickards' book 4 stars. But the above is so central to any studentship of gold parities that I wonder.....