Favorite Economics Books for Precious Metals Investment
See also: American Gold Exchange of Austin, Texas
BACKGROUND BOOKS
Keynes Hayek, The Clash that Defined Modern Economics, Nicholas Wapshott
- Keyes was proven right EXCEPT for the stagflation of the 1980's. Basically Keynesian economics holds that:
- When the economy is going well, the government should cut back on spending (else the economy will overheat, causing wages to rise and inflation to set in).
- When the economy is slow, government should step up spending to keep the money supply circulating.
The Federal Reserve and the Banking Crisis, Lectures by Ben S. Bernanke
- This book is both understandable and readable. Many recent books (written from a right wing slant) knock the Fed as if they were some sort of devil (some of these books, none the less, have good historical summaries).
- The most basic, underlying heart of gold investment in recent years has been in response to monetary policy. In a nutshell, the Fed exists for two purposes:
- To prevent a "run on the banks"
- Given that very few alive today have ever seen a run on a bank, the Fed has done a good job.
- Banks hold illiquid (i.e., it takes time to sell them) assets. Money is the most liquid asset there is. Should all the depositors want to withdraw their money at the same time (mainly because they think the bank is going broke), the Fed steps in with liquid (dollars) to hand out to depositors in exchange for the illiquid assets on the bank's books.
- To put more money into circulation (or to take some money out of circulation)
- The more people in the economy that want to exchange goods and services, the more money the economy needs in circulation (to act as "oil") to enable this exchange.
- Bernanke's balanced discussion of why the Fed bailed out some banks makes this book a rare find among today's books on the Fed.
The Battle of Breton Woods, Ben Steil
- This book describes a key conference in which the dollar displaced the pound to become the world's reserve currency (i.e., internationally bought and sold commodities like oil are bought and paid for in dollars). The history in the first and last thirds are good. The middle describes a lot of conference minutia.
The Big Reset - The War on Gold and the Financial Endgame, William Middelkoop
- This might have been titled "The Battle of Breton Woods, Volume 2". It describes the approaching end of the dollar as the worlds intermediate exchange (aka reserve) currency. This end will be inflationary (to the dollar) and possibly destabilizing.
The Age of Oversupply, Daniel Alpert
- The ending conclusions get confusing, airy and perhaps inconsistent, but the book describes the modern high quality low skill production paradigm that's driving today's offshoring and trade imbalances. As a result, much of the monetary stimulation of the American economy passes right on through into buying goods from (e.g.) China - rather than creating jobs here at home.
These two are good at covering the same basic economic background:
Global Economic History, A Very Short Introduction, Robert C. Allen
A Farewell to Alms, A Brief Economic History of the World, Gregory Clark
The Mystery of Banking, Murray N. Rothbard
- While this book might be too basic for someone with a business degree, I had to start somewhere. It starts with how a barter system evolves into having a medium of exchange (the book uses fish as an example), and from there - how banking arises.
With the above background, these are the books for precious metals investment that I have found helpful:
Gold Wars, The Battle for the Global Economy, Kelly Mitchell
Gold, The Race for the World's Most Seductive Metal, Matthew Hart
- How gold is seen as a safe haven for modern "fiat" currency (and how the national debt along with the monetary policies of the Fed affect the price of gold).
These are a bit sensational, but these have good historical summaries mixed in with the demagoguery:
How to Buy Gold and Silver, Doyle Schuler
Stack Silver, Get Gold, Hunter Ripley III
The Silver Bomb, Michael MacDonald & Christopher Whitestone
Amazon samples I've read that have potential:
This Time is Different, Eight Centuries of Financial Folly, Carmen m. Reinhart & Kenneth S. Rogoff
The Gold Cartel, Dimitri Speck
- This book starts with a "war game" scenario at the Pentagon, in which America's potenial adversaries threaten to collapse the dollar by calling in debt and refusing dollar payment for internationally traded goods.
How an Economy Grows and Why it Crashes, Peter D. Schiff
As far as gold is concerned, NONE of the above (so far as I've read) adequately describe how to relate short term news events to their economic implications and (in turn) to the consequent volatility/ups/downs in the price of gold. Nor do they describe such basics as metal price support and resistance levels (which are the macro effects of a whole lot of marketplace micro decisions). If you're interested, talk to the people at American Gold Exchange. They are well versed in long term "buy and hold" (which they heavily favor over short term trading) strategies. I've made a WHOLE lot more money working with them, than any of the other investment people I've dealt with over the years. They know all about this stuff and then some.