The Golden Revolution: How to Prepare for the Coming Global Gold Standard [Hardcover]

John Butler (Author)

Book Description

Publication Date: April 10, 2012

Why the gold standard is due for a comeback

A reserve currency can only function as such if there is a general consensus that it provides a stable store of value. Without this trust, money, no matter what form it takes, will be abandoned--either suddenly in a crisis, or gradually over time--in favor of something else. The Golden Revolution looks at how the world is now moving rapidly toward some form of global metallic standard, in which money, at least in official, international transactions, is linked directly to gold.
The practical reality of the transition to the coming global gold standard is going to be substantially different from the global fiat monetary and financial regime of today. It is not just money that is going to change. The nature and business of banking will also be affected, as will finance in general.

• Incisive and thoughtful, The Golden Revolution is a treatise on the broad effects of the current and future monetary structure
• Looks at why the world is headed inexorably back towards a metallic money standard
• Explores what the transition period might look like, including some historical examples of both orderly and disorderly transitions
• Examines how the world of banking, finance, and investment, including asset valuation and portfolio management techniques, will work under a future gold standard and which industries, countries and markets are likely to benefit and which are likely to suffer

Full of advice on how investors can profit and protect themselves during this critical time of change, the book knows that those who are prepared will prosper, while those who aren't stand to lose.

Editorial Reviews

From the Inside Flap

The protracted global economic crisis has awakened the long-dormant debate about whether the United States or other countries should reinstate some form of gold standard. While not surprising given that there is now general agreement that excessive money and credit growth played a key role in the near collapse of the global financial system in 2008, in fact a return to gold is inevitable at this point. John Butler makes a compelling case in this book that there is simply no other way to restore a sufficient degree of credibility and trust in the dollar, or other major currencies for that matter, without a return to some form of gold standard.

Already there are a number of major countries expressing concern about the stability of the dollar. And concern is increasingly giving way to action. As the dollar′s role gradually declines, global monetary arrangements are likely to become increasingly multipolar, as there is no single currency that can realistically replace the dollar as the preeminent global monetary reserve. As students of economic history will note, it was precisely a multipolar world amid rapidly growing international trade that ushered in the classical gold standard in the 1870s. The world′s 40-year experiment with purely unbacked fiat currencies is thus rapidly approaching its conclusion.

This book, however, goes much farther than predict a return to gold. It explores just what the transition might look like, including both orderly and disorderly scenarios and drawing on historical examples where relevant. It considers to what extent the price of gold will likely rise as it becomes remonetized. Most important, it prepares the reader with practical investment advice for the coming return to gold, including thoughts on interest rates, exchange rates, credit spreads, equity market valuations, and risk premia for assets in general. As such, John Butler provides not only a compelling vision of the future, but also a detailed road map for navigating what is likely to be the most challenging investment landscape in generations.

From the Back Cover

PRAISE FOR THE GOLDEN REVOLUTION

"John Butler provides much illuminating detail on how the world′s monetary system got into its present mess. And if you′re wondering what comes next, this is the book to read."
--Bill Bonner, author of the New York Times bestsellers Empire of Debt, Financial Reckoning Day, and Mobs, Messiahs and Markets

"John Butler has written an indispensable reference on the subject of gold as money. His book is a combination of history, analysis, and economics that the reader will find useful in understanding the use and misuse of gold standards over the past century. He breaks the book into a long series of essays on particular aspects of gold that the reader can take as a whole or in small bites. It is technical yet accessible at the same time. The Golden Revolution is a useful and timely contribution to the growing literature on gold and gold standards in monetary systems. I highly recommend it."
--James Rickards, author of Currency Wars: The Making of the Next Global Crisis

"In The Golden Revolution, John Butler makes a powerful case for a return to the gold standard and offers a plausible path for our nation to get there. Enlightened investors who blaze the trail will likely reap the greatest reward. For those still wandering in the dark, this book provides necessary light to keep you headed in the right direction."
 --Peter Schiff, CEO, Euro Pacific Precious Metals; host of The Peter Schiff Show; and author of The Real Crash: America′s Coming Bankruptcy--How to Save Yourself and Your Country

"John Butler′s historical treasure trove empowers the reader to understand, prepare, and act. To have a chance to emerge unscathed from financial turmoil, join the Golden Revolution. I have."
--Axel Merk, Merk Funds; author of Sustainable Wealth

"The Golden Revolution is another indispensable step on the road map back to sound money. John Butler′s experience of the modern ′fiat′ banking world, combined with his understanding of the virtues of a disciplined monetary system, allow for genuine insight into the practical steps that could, and surely will, be taken to reestablish gold as money."
--Ned Naylor-Leyland, Investment Director MCSI, Cheviot Asset Management

"Ex scientia pecuniae libertas (out of knowledge of money comes freedom). John has used his exemplary knowledge of money to lay out a cogent framework for the transition of society based on fiat money to a more honest society forged by gold. He has taken complexity and given us simplicity. Monetary economics and its interrelationship with geopolitics, finance, and society is extraordinarily complex, but he has managed to assimilate a vast array of information and distill it in a simple and thoroughly thoughtful framework. That is an art many academic writers never achieve."
--Ben Davies, cofounder and CEO, Hinde Capital

See all Editorial Reviews

Product Details

• Hardcover: 214 pages
• Publisher: Wiley; 1 edition (April 10, 2012)
• Language: English
• ISBN-10: 1118136489
• ISBN-13: 978-1118136485
• Product Dimensions: 6.4 x 0.8 x 9.1 inches
• Shipping Weight: 14.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (7 customer reviews)
• Amazon Best Sellers Rank: #93,999 in Books (See Top 100 in Books)
  • #42 in Books > Business & Investing > Investing > Commodities
  • #56 in Books > Business & Investing > Economics > Money & Monetary Policy

More About the Author

John Butler worked for over 15 years as an interest rate, foreign exchange, and commodity strategist at major banks around the world before founding an independent investment and advisory firm in London. He has written extensively on financial topics, and his work has been cited in the Financial Times, the Wall Street Journal, and the Frankfurter Allgemeine Zeitung, among other publications. He is also the author and publisher of the popular Amphora Report newsletter and is an occasional speaker at global investment conferences. He resides in the English countryside with his wife and four children.

Most Helpful Customer Reviews

26 of 26 people found the following review helpful

5.0 out of 5 stars A Golden Book March 25, 2012

By Jman

Format:Hardcover

Many books analysing the ongoing economic crisis and fallout from the 2008 credit crunch are either overly polemical and anectodal or overly technical and dense. The Golden Revolution falls into neither of those traps. Fast-paced, engaging, touching on history, politics and economics, this is a fantastic and timely read for anyone interested in getting an edge on understanding the causes and predicting the consequences of the current macro-economic malaise. You don't need a PhD in economics from the University of Chicago to appreciate this book, and even if you don't agree with Butler's premise that a return to the gold standard is inevitable -- be it preferably by means of a proactive and managed policy change by the US, or as an emergency US response to a monetary attack by one or all of the BRIC countries -- you will enjoy this book which among other things probes the link between the advent of fiat currency since Nixon's decision in 1971 to end USD gold convertibility and the severe boom and bust cycles experienced since then. The asset value and investment strategy implications of a return to the gold standard are also thoughtfully considered. Notwithstanding its thesis, this book is neither a gold nutter or Austrian School of Economics manifesto, but rather a well constructed historical, monetary and economic argument in praise of a return to the gold standard by an experienced financial markets professional. Don't read this book at your peril!

20 of 20 people found the following review helpful

5.0 out of 5 stars The Golden Revolution March 25, 2012

By Jon David

Format:Hardcover

The Golden Revolution: How to Prepare for the Coming Global Gold Standard

Chairman Bernanke's recently gave a lecture about gold where he took aim at proponents of the "gold standard" saying that it handicaps the ability of governments to address economic conditions and hampers solving domestic distress. But what the chairman failed to talk about is what actually caused the economic distress in the first place.

John Butler, the author of the "Golden Revolution", examines how a fiat based monetary system where loose monetary policy creates "dubious" credit growth which in turn favours cheap consumption rather than savings and investment is indeed the root of the problem. What the author proposes is a return to a monetary standard that is open and fair, and does not favour a few insiders.

In a series of essays, John Butler in his "Golden Revolution" lays the ground work that offers the reader a road map back to that classic period of a working gold standard where the world saw almost no inflation and the value of a dollar was known to all. The author shows that under a loose monetary system in which central banks and governments have the power to print money and monetize assets of poor quality nothing will change and savings will be destroyed as the value of all currencies are debased. The author rightfully points out that rebalancing worked naturally under a classic gold standard without any harmful intervention.

In one of my favorite essays, John Butler discusses what a positive transition might look like and offers practical advices on how asset valuation and portfolio management would work under that classic gold standard.

As the author points out the world's 40-year experiment with un-backed fiat currencies is thus rapidly approaching its conclusion and we should join the revolution.

First they ignore you, then they ridicule you, and then they want to fight you. Chairman Bernanke's gold lecture and the Golden Revolution shows that the fight has begun!

8 of 8 people found the following review helpful

5.0 out of 5 stars The Golden Revolution is an Important Book September 11, 2012

By Keith Weiner

Format:Hardcover

There are many books on the market today about the coming collapse of the global dollar-based monetary system. Many of them purport to help the reader "profit" from the collapse(!) Others are filled (just like the blogosphere from which they often come) with dark, conspiratorial whispers, psychologizing of leaders in government and finance, and preposterous ideas about how people actually think and act. They often contain policy prescriptions that consist of doing more of what caused the problem in the first place: politicizing banking and trading with even more regulations, taxes, prohibitions, agencies, etc.

I have not written a book review before now because I think those books are misguided. The nihilistic envy of corporations and banks is a part of the problem and not the solution. The idea that "real estate, stocks, and bonds have had their bubbles and now it's our turn" is naďve, at best.

The Golden Revolution by John Butler is not cut from the same cloth.

We have a perverse and self-defeating monetary system today. Without knowing how it evolved, where it came from, and what transitions occurred along the way, it is almost incomprehensible. One can listen to the talking heads on the mainstream media, the strident alternative financial press, or even economists who really understand, and still not understand why the monetary system is the way it is or how it operates. How is one to evaluate whether a failure of regulation caused the collapse of 2008 or whether China-India trade denominated in yuan will threaten the US dollar's reserve status?

Mr. Butler covers the history of what led up to 2008, without dwelling too much on details that will bore most readers. It is important to understand the connection between Nixon's 1971 default on the US government's gold obligations and today's endemic perpetual crisis. Mr. Butler sheds some light on what led up to Nixon's decision. The monetary system today is the product of Nixon's decision and Nixon's decision was the product of an untenable framework that was created after World War II (which itself was the product of earlier decisions, etc.)

Mr. Butler makes the radical (perhaps not to most of my readers!) proposition that the world will end up, one way or the other, on some form of a gold standard. He explores this from various perspectives including Game Theory. He makes a compelling argument, not based on what some shadowy "they" want, but uses a very "Austrian Economics" method. He looks at how each player will react to unfolding events and why they will behave in certain ways.

Human action is not the action of particles of an ideal gas, as modern econometrics presumes. Nor is it the shuffling of sleeping sheep guided by all-knowing shepherds as modern public policy theories would suggest, nor is it accurate to portray the citizens as simply obeying orders they hate strictly under compulsion of a dictator. There is a feedback process between the governor and the governed. Each is pursuing what he defines as his interest. And it is a dynamic system that is inexorably moving somewhere.

I don't think I would spoil a book called The Golden Revolution to say that the system is moving towards gold!

Mr. Butler devotes part of the book to discuss the transition itself, a topic that is not much addressed yet. In a way it's insane: even the enemies of gold must acknowledge that the current system is unsustainable in many different ways and by any definition of sustainability. And yet few of them--or the "goldbugs" either--spend much time thinking seriously and realistically about what the process of change might look like, how it might occur, and how it will impact different people and sectors.

And there is the question: transition to what? Gold is the money of a free market. If one wants the opposite of a free market, i.e. socialism and central planning, then one should be happy for the government to simply print ration coupons for the things it decides that one needs; there is no need for gold. I found a particular pleasure to read Mr. Butler's discussion of regulation and even the very existence of central banks. Why do we need them? Is it even conceivable to live without them?

Along the way, Mr. Butler tackles the Capital Asset Pricing Model, showing how unnaturally low interest rates caused by central banks distort the market's ability to allocate capital. Most people focus on the propensity of prices to rise, and do not think about the impact of the interest rate. If the former can be thought of as a tax, and the latter as something which forces capital out of certain sectors and into others, then it is obvious that distorted interest rates do more damage to the economy. And further, as Mr. Butler shows, GDP is a false measure that is not helpful in understanding the distortion or the consequent damage.

John Butler has had a career at major banks, working in interest rates and foreign exchange. He is on the leading edge of the trend towards re-monetizing gold, being the first that I have seen to report on the Basel and subsequently the FDIC/Fed/OCC proposed rules to allow banks to hold gold as a zero risk-weight asset.

In The Golden Revolution, he has written an important book that should be of interest to any serious observer or participant of the financial system and especially to advocates of sound money.

Keith Weiner is a technology entrepreneur and president of the Gold Standard Institute USA.

He was the founder of DiamondWare, a Voice Over Internet Protocol software company, which he sold to Nortel in 2008. He is an Objectivist who has his PhD from the New Austrian School of Economics.

Keith, who currently trades and analyzes precious metals and commodities, advocates a return to a proper gold standard and laissez-faire capitalism. He lives with his wife near Phoenix, Arizona.