A book setting out a contemporary case for gold as a form of money, and as a way to protect portfolios, has been published by a man already known for warnings about currency wars and stresses on the financial order.

You cannot keep a good man down, it is said, and as far as some people are concerned, you cannot keep gold down forever, either. It may be possible to force the price of the metal into a slide and push it to the sidelines of central banks for a period but gold remains a vital cog in the global financial system. And it may yet regain its historical place as the anchor of sound monetary regimes.

Such is the contention of a man who has already made a name for himself in calling time on what he sees as the era of “fiat money” and discretionary monetary policy. James Rickards, author of the New York Times bestseller, The Death of Money, and an earlier, equally arresting book, Currency Wars, is getting attention. He is well-connected: Rickards has worked advising the US Department of Defense and the US intelligence community, facilitating one of the first-ever financial “war games” conducted by the Pentagon. His latest offering, designed to be a straightforward paean to the case for gold, is a succinct, 182-page work that debunks what Rickards says are certain myths, and then sets out how a financial unravelling will occur, before advising people on what to do.

Rickards argues there are a number of charges invoked against gold by the contemporary economic establishment, which he says are unfounded, out of date or in fact an argument in favour of gold. These include: gold is a “barbarous relic”; there is not enough of the yellow metal to support finance and commerce; gold supply does not keep pace with global economic growth; gold caused the Great Depression; gold has no yield, and gold has no intrinsic value. Rickards goes through all these points, unpicking what he sees as the errors, or false turns of reasoning. For example, this reviewer was impressed by how Rickards notes that gold’s lack of yield is precisely a result of it being genuine money. Gold is not supposed to have a return or yield, precisely because it has no risk; it is not a risk asset like the stock in a company or a bond. And unlike deposits of conventional money in a bank, which are the bank’s unsecured liabilities, gold is not a liability. It is money, pure and simple. 

The author also contests what he says is the nonsensical idea that there is not enough gold to support trade and finance today. The fallacy is that critics, when they say there is not “enough” gold, really mean that there is not enough of the stuff at current prices. Such an objection hardly weakens the case for gold-backed currency, Rickards says. “It is an objection to a candid confrontation with the real value of paper money relative to physical gold. That confrontation will take place as confidence in paper money is eroded, and a gold standard gains favour to restore confidence in our economic systems.”

The arguments are convincingly made, and there are just enough financial figures to leaven the bread of his narrative without becoming burdensome. This is very much a short treatise, with a bit of a self-help manual and points for advice at the end. What impressed the reviewer was the lack of a hectoring tone or a tendency to assume bad faith on the part of those who might disagree with him. 

And Rickards is certainly not alone. Now in its second, updated edition, is another book out recently by the investment industry figure and commentator Detlev Schlichter, entitled Paper Money Collapse (as reviewed by this publication here.) Figures such as Jim Rogers, the renowned international investor, and Peter Schiff, an investor and TV pundit in the US, have argued for gold. Recently, Pictet, the Swiss private bank, mooted the idea of moving back into the metal as a portfolio hedge, and data from the World Gold Council, the industry group, showed global demand in the first quarter of this year gained sharply. Gold-based trading and investment platforms continue to emerge. In London, the gold storage and trading firm, Sharps Pixley, has opened a new office and facility in the capital’s fashionable St Jame’s Street. Gold-storage facilities, along with facilities for other “hard assets” such as fine art, classic cars and wines, remain popular.

As Rickards said to this publication during a recent meeting, confidence in the world’s financial system remains “fragile”, and Rickards is struck, as his book says, at how central banks such as the European Central Bank, US Fed and Bank of Japan have experimented to an unprecedented degree with quantitative easing, “forward-guidance”, and other ideas. But perhaps one of the most compelling points is the fact that countries such as China and Germany, for example, have been significant buyers of gold. If gold is only for oddballs or conspiracy theorists, then some of the most important institutions of the planet have not got the memo.

Gold is not a barbarous relic (Keynes was misquoted, as the book says) and it may well be that its role in anchoring money in the years ahead will return if policymakers despair of making fiat money work in such uncertain times. Rickards’ book is highly recommended.