Canadian author Matthew Hart obviously has a thing for geology. His previous book, Diamond: The History of a Cold-Blooded Love Affair, presented an engaging mix of science and psychology about the world’s most glittering jewel. His latest offering, Gold: The Race for the World’s Most Seductive Metal, takes on the backbone of the world’s monetary system with an equally engaging and rollicking style.

The book tells the story of how this precious metal came to underpin the modern economy, but before we arrive at the international gold markets, Hart guides us through the underbelly of mining.

Starting in Mponeng mine, the deepest man-made hole on earth, Hart presents a picture of claustrophobic pressure worthy of Hollywood. Thousands of men descend each day into a space big enough to fill “a grid between 59th Street and 110th Street of Manhattan.” Miners travel five times deeper than the height of Dubai’s Burj Khalifa to work a seam of ore that is only thirty inches wide. Here, in the bowels of the earth, the rock temperatures reach 140 degrees Fahrenheit, and the humidity is 95%. If the stakes are high, it’s because the rewards are also high. That sliver of ore spills out $948 million worth of gold a year.

Hart introduces us to the 6,000-year history of gold that starts with the Thracian treasures, which were found in Bulgaria. They are the oldest known gold artifacts – 80 beautifully crafted pieces – which seemed to have no other significance than their beauty. It would be 1,500 years before the introduction of gold money in 635 BC and another 1,000 again before the story of gold’s rise to power with Spain’s bloody quest on Mexico’s Yucatan coast in the 15th and 16th centuries.

The next milestone in gold’s history was in the late 16th century, when London’s goldsmith bankers branched into foreign exchange by accepting each other’s paper bills as part of a competition for customers. Countries were bound to a strict agreement that national currency would match the amount of gold bullion in reserve. The gold standard was born.

The modern history of the gold standard; the rise of the mining company; the invention of bonds; the post-war rise of the US dollar which set the gold standards at $35 an ounce; President Nixon floating the dollar in 1972, thereby cutting the gold standard dead and allowing the price of gold to float free. It all unfolds as a fascinating read as the writer skillfully brings us full circle to China’s entry into gold mining.

The interest for investors is clear: in late August 2011, gold hit $1,917.9 an ounce. After the banking crisis that followed the collapse of Lehman Brothers in 2008, G20 finance ministers issued new capital requirements for banks. These included bigger liquidity buffers – including gold. Today, the London gold market alone trades at $240 billion a day.

Why one should go to the trouble of reading this book is also clear: with the current rise in the value of new electronic currencies such as bitcoin, this book is a timely reminder of what once underpinned the global financial markets; why it mattered that currencies were tied to something firm; and why gold is no longer the anchor we might think it is.

Read more book reviews on the Forum:Blog. Titles are selected in collaboration with getAbstract.

Author: Sheridan Jobbins is a journalist and screenwriter.

Image: A pure gold statue of Buddha in Tokyo. REUTERS/Yuriko Nakao