Dear Listener

Why do we love gold. That was the question on Nightwaves on Radio 3 this week when it examined the cultural and economic history of element Au 79.

Among many other reasons is that it does not tarnish, it is malleable and ductile, ideal for making jewellery, some of which dates back 6000 years. And since 650BC when the Lydians stamped it into equally sized flat round pieces, it has been widely used as a portable medium of exchange – money. That makes it fungible too.

Of all the gold ever mined – estimated by the World Gold Council at 161,000 tonnes – 52% is still worn round necks, wrists and fingers. In that form it is both ornamental and a way of carrying round – and displaying – your wealth.

More recently gold has become useful as a reliable conductor in the micro-circuits inside electronic devices. Your smart phone probably contains around 35p worth. But industrial uses only account for about an eighth of the gold mined.

The rest is held almost equally between private investors and central banks. Their holdings date back to the time when gold underpinned the currency of the western world. That is why our fivers still say - I promise to pay the bearer on demand the sum of five pounds. In the nineteenth and early twentieth century a five pound note could be exchanged at the Bank for five gold sovereigns. That gave people confidence in the value of a mere bit of paper.

The UK left the gold standard in 1931 and the USA in 1933. But it was not until 1971 that President Nixon ended the convertibility of dollars into gold at a fixed price. Finally divorcing it from the 19,000 tonnes of gold held in Fort Knox – nearly two thirds of all the gold held by nations.

But some people are now asking if we should go back to the gold standard. The reason they say that is to try to control the burgeoning debts of the western economies – including of course the UK, the USA and the whole of the EU. It would also stop governments printing money – the old-fashioned term for what is now called Quantitative Easing. The Bank of England has created 325 billion pounds out of thin air since March 2009.

Such a process is inevitably inflationary, partly because it pushes up the price of commodities such as oil and gold itself.

Hear the whole debate – and the literary side of gold from Midas through the Wizard of Oz to The Lord of the Rings and Harry Potter – with author A S Byatt, gold standard advocate John Butler, British Museum metallurgist Susan La Niece, economic anthropologist Keith Hart and me, all ably kept in order by Nightwaves presenter Rana Mitter www.bbc.co.uk/programmes/b01g5zf9#synopsis 

***IN MONEY BOX THIS WEEK***

One of the largest part-time recruitment agencies in the UK is accused of short-changing workers who leave by wrongly calculating the holiday pay they are owed. The firm denies it.

The Insolvency Service explains what evidence it needs to close down dodgy wine investment companies in the public interest. We ask why it has only shut down four in the last two years.

A survey shows how poor major banks and building societies are at dealing with relatives who have a power of attorney.

One man tells us he borrowed more than four thousand pounds to pay the upfront fee to get compensation on eleven Payment Protection Insurance claims. Ten months later he is still waiting. We talk to the Ministry of Justice about why it has closed down 734 firms which do this work – and why it has let more than 3000 stay in business.

Those four items should nicely fill our 24 minutes of prime time Radio 4. You can hear the whole show live at midday on Saturday, repeated Sunday 9pm, or anytime online at www.bbc.co.uk/podcasts/series/moneybox. Remember you can put in a regular order for our podcast. It is free.

There is more information on our website www.bbc.co.uk/moneybox where you can also download transcripts of past programmes and send us ideas or problems you want us to look into.

This newsletter is available at bbc.co.uk/moneybox/newsletter around the time it hits your inbox - tell your friends who do not subscribe. And you could join more than 29,000 people who now follow me on Twitter to enjoy - or rant about - my random but timely thoughts on money and a few other things whenever I am awake at twitter.com/paullewismoney.

Vincent Duggleby is here on Wednesday with Money Box Live at 3pm taking questions on divorce and separation and dissolution of civil partnerships.

Best wishes,

Paul

PS. I will be on Breakfast on BBC One on Saturday talking about one of the items in our programme probably around 0840. And back on Breakfast on Thursday morning with another money story, probably 0640 and 0820. But times can change at short notice.

e-mail Paul Lewis