t's 1994, royalty group Franco-Nevada is valued at a mere C$1bn, founder Pierre Lassonde is still holding down his desk job as a fund manager at Beutel Goodman and he has just published The Gold Book, a rattling guide to precious metals. Lassonde throws on overalls and goes down an underground mine for the first time, terrified. He stands in front of Tutankhamen's tomb in a museum in Cairo. He taps gold in the quartz wall of an underground mine, it bursts and a month later, the mine collapses. And that's just the preface. The book is packed with lively characters, from Herbert Hoover financing mines in Australia to Henry Comstock, “a ragged, lice-ridden prospector” and his “down-and-out cronies”, who couldn't “read the label on a whisky bottle”. Mine promoter Robert Friedland, whose latest venture had just gone under, is described as something of a “space cadet.” In many ways, not much has changed since the book was published over twenty years ago: the world was shocked by negative interest rates in Switzerland, Russia was struggling to finance its deficit, whilst Carlin and Goldstrike were the two biggest gold mines in America. Many of Lassonde's predictions, meanwhile, have proved bang on, from the decline of South Africa's gold mines (then at their peak) to the outlandish claim that gold could reach “dramatic new highs of over $1,000.” But Russia will stay in the doldrums. “There isn't enough money in the world to bail the Russians out of the predicament they are in.” From the French Revolution of the 1790s to the oil crisis of the 1970s, history in Lassonde's eyes is a bouncing turbulence of crises, in which gold holds largely steady, moving ahead of inflation, as ever-greedy governments tamper with every coinage. Yet Lassonde is far from a gold-bug. Returning to the gold standard would be “like trying to stop the tide with sandbags.” Surprisingly, he also defends the practice of gold hedging. The main objective of the book is to debunk many of the “irrational” arguments against investing in gold. It doesn't pay interest! Nor does oil. It's too volatile! Less choppy than stocks. Lassonde also goes through some clear rules on when

to bail-out of a gold stock, showing that he thinks like an investor, not a corporate chief. “Tread carefully” when a small company decides to push its discovery into production. “Not only will it probably make every possible mistake, it won't have the deep pockets of the large mining companies.” Investing, Lassonde says, is about keeping your “eyes firmly on the ball and not the pitcher.” With gold stocks, that means focusing on a company's gold reserves, multiplied by its profit margin per ounce, a beautifully simple rule of thumb for valuing complex companies. A mine's sunk-cost, which promoters so often harp on about, is pretty much meaningless. Chapter 9, the most contentious at the time, looks at gold scams. A lot of “hot” stocks are nothing more than “worthless desert dirt.” And most scams follow an identical pattern for ripping-off the “gullible” public; if you're looking to rob the market, there's a blueprint here. Perhaps the most entertaining is a ruse to mine beach sand in Costa Rica. “The gold, the company claimed, was a renewable resource since it was brought in by the tides.” Lassonde is equally scathing about other corners of the market, citing a legal disclaimer he found in a futures contract: “The first step in successful futures trading is deciding how much money you are willing to lose on each trade.” If writing is a reflection of thought, Lassonde throws himself easily into other people's shoes. “While the French were busy using the guillotine and overthrowing the old feudal system, the American colonists were trying to create something out of nothing.” On Nevada's first gold rush: “Millionaires were born between breakfast and dinner.” For three weeks or so, reading The Gold Book felt like having Pierre Lassonde tucked under one arm, chatting about stocks, telling the odd joke. As the book ends, one disappointment therefore sets in. Everything Lassonde is famous for, his fast cars, his passion for art, the thinking behind each of his multi-billion dollar gold deals, the evolution of Franco-Nevada into the world's shiniest cash machine, all really took off just after the book was published. He now has better things to do with his time, but if Lassonde wrote a follow-up, it'd be a difficult book to beat.