Timothy Green is arguably the man with more knowledge about the whereaboutsof more ounces of gold in the world than any of the rest of us.  After forty years in the gold market, and with a vast amount of experienceincluding acting as consultant to almost three decades'-worth of theConsolidated Gold fields (now GFMS) Gold Surveys, he also has a list of booksto his name, the most recent of which is The Ages of Gold, published by GFMSLimited, which looks at gold's history from as far back as 4,000 BC and comesright up to the present day.  We aretaken from the first goldsmiths to the graveyards of Mesopotamia including the2,500-year-old Royal Graves at Ur on the banks of the Euphrates, all the waythrough to the importance today of the hedge funds and day traders through ETFsand options or in Over-the-Counter derivatives, along with gold's importance inhigh-technology including spacecraft and space stations, and its increasingimportance for nanotechnology. 

There is a hint of irony in the fact that the author of this book livesunder the name of Green, as one of the publications' concluding comments (fromDr. Chris Corti of COReGold Technology), refers to gold's chemicalcharacteristics as follows: The properties of gold on the nanoscale and its chemicalproperties are important for the future... these include catalysts for pollution controland energy generation, along with use of gold compounds and nanotechnology formedical diagnostics and treatment.  Goldis a green metal for the 21st century.

Mr. Green argues that among those elementsthat are constantly shaken to stir the price, central banks are modest teamplayers, taking something of a back seat to the shorter term traders listedabove, who constantly seek price movement. The central banks were only sporadically in the gold market followingthe sales from the IMF and the US treasury in thelate 1970s, until the bullion banks, thirsty for borrowed gold in order tounderwrite mining projects, tempted the official sector back into the marketand over the late 1980s and 1990s. Over sixty central banks became involved,lending over 4,500 tonnes into the market, equivalent to almost 15% of allofficial holdings.  As we have seen fromthe recent Société Générale/GFMS hedge book survey, the book stood at 835 tonnesat end-December 2007, the lowest since 1992 - and AngloGold-Ashanti'sannouncement reveals a further reduction of 135 tonnes in that company's bookalone during the first quarter of this year.

Mr. Green argues that from earning a littleincome through loans, it was a short step to central banks selling theirreserves.  The loans got central bankerstalking to bullion bankers, who explained that a little gold could be solddiscreetly over several months, or even years, without the market being awareof what was going on, or at least, knowing who was selling...  the central banks' arrival as regular sellersjust as the gold mining boom was delivering more output every year changed thedynamics of the market.. [and that] the final blow was ... the decision of GordonBrown, the [UK] Chancellor of theExchequer to sell half of Britain's gold reserves.

This, Mr. Green argues (and he is by no meansalone in this) sent a terrible signal to the market.  The Bank of England had set Britain on the gold standardin the 18th century; it had nursed the gold market for three hundredyears.

With respect to the Central Bank GoldAgreement, Mr. Green assets that at least [the official sector has] learned tolive with the new world of gold, although the question of the stock of over8,000 tonnes still held by the United States has not been addressed.  The Europeans, with over 13,000 tonnes intheir vault, can now be regarded as the stakeholders in the future of the goldmarket, even if it will be primarily as sellers.  He notes that a scattering of politicallyisolated States, including Iran, have bought gold and taken it home, and that,in this dangerous world that strategy may continue.  The quantities, however, are unlikely tomatch the level of sales.

The central banks may have been back in the market over the last twentyyears after a decade or so of limited activity, but gold's role in governmentgoes back an awful lot longer than the Bank of England's gold standard of the eighteenthcentury.  The city of Babylon was effectively ona gold standard for a period after 1,400 BC; and, after taking us through theAncient world, to the empires of China and Rome, the book bringsus to Byzantium.  The Emperor Constantine declared the formercity of Byzantium as his capital inAD330, renaming it Constantinople and then, for thenext 150 years or so, though to the death of the last truly Roman westernemperor, Romulus in AD476 and latterlythe accession of Anastasius in AD 491, civilisation could be regarded as beingin a period of transition. Rome (and subsequently Ravenna) and Constantinople effectively ran inparallel, with common gold coinage, which the book suggests might be called anearly gold standard.  The Roman empire wasby then struggling under the erosion of its military power and German tribeswere constantly being bribed in gold to try and keep them out - in AD422 theannual subsidy was 680 kg,- equivalent to 5,208 ounces which in today's money(a.m. fix May 13th at $877.00) would be $4.6 million.

Constantinople, meanwhile, was collecting gold intaxes, melting all such collected coin into ingots and the Emperor TheodosiusII held gold reserves in the first half of the fifth century of 32.4 tonnes,comprising 7.2 million solidi or numismata, as they came to be called.  By the sixth century the currency wasreceiving widespread acceptance, with the influence spreading far. Burgundiankings in France, for example, startedaccepting these coins, adding their own monograms struck at the mint in Lyon.   This section of the book goes on to describehow the Empires flourished and changed, with the weight of coins coming to beexpressed in carats, which was the ubiquitous measure of weight in the eastern Mediterranean, based on thecarob seed..  One solidus weighed 24carats.

In modern-day parlance, of course, gold caratage refers to fineness -although in the diamond market it remains a term of weight.

The Byzantine empire effectively went into terminaldecline with the Crusaders' capture of Constantinople in 1204, thus moreor less bringing to  an end a gold standardthat lasted almost a thousand years. 

This fascinating book covers considerably more than just gold's role incoinage and government; it looks at how gold influenced the course of history(the Spanish foray into America, for example) aswell as celebrating the mining industry and gold craftsmanship through theages.

It also serves to remind us that the gold standard was not an inventionof modern man.  One wonders quite how farback J.M. Keynes was looking when he referred to the gold standard (not golditself, note) as a barbarous relic.