 How much gold is there ?
In the world there are currently somewhere between 120,000
and 140,000 tonnes of gold ‘above ground’. To
visualise this imagine a single solid gold cube with edges
of about 19 metres (about three metres short of the length
of a tennis court). That's all that has ever been produced.
Divided amongst the population of the world there are about
23 grams per person, about 1.2 cubic centimetres each. This
equates to about $250 - $350 worth per person on Earth, depending
on the current price.
What's it worth ?
The value of that short tennis court sized cube is about
$1.8 trillion. This compares to the US government’s
sovereign debt of $6.9 trillion, which until 1971 was part-backed
by gold. The US Gold Reserve is just over 8,000 tonnes -
which is about 6% of the total gold ever mined. It is worth
about $100 billion, or 1.5% of the US national debt.
$1.8 trillion is about one fourteenth of the paper based
international bond markets, which themselves, at about $26
trillion, are about two thirds composed of western government
sovereign debt almost all of which has appeared, co-incidentally,
since 1971 and the declared supremacy of paper money, which
was what allowed governments to borrow without caution. The
total gold content of the world would pay - at current values
- about 7% of the international bond market's sovereign debt.
But of course 75% of the world's gold is not available to
governments - being held privately as jewellery, bullion
and coin. In fact only about 30,000 tonnes, about 1% of the
world's sovereign debt is what is held in central bank gold
reserves.
Meanwhile the entire gold stock of the world - including
the privately held bulk - is much less than one half of one
percent of the underwritten risk in the global financial
derivatives markets.
The world has placed absolute trust in paper currency denominated
assets. Investors have shunned gold for about twenty years
while the notional value of paper based financial assets
has exploded.
Who owns the gold ?
About 30,000 tonnes of the world’s gold [20-25% of
above ground inventory] is held in central bank vaults.
Major Central Bank Reserves (2000)
| Nations & institutions |
Reserves (Tonnes) |
| USA |
8139 |
| Germany |
3469 |
| IMF |
3217 |
| France |
3025 |
| Switzerland |
2590 |
| Italy |
2452 |
The totals for other central banks tail off rapidly after
these main holders. Most only hold a few hundred tonnes,
and together they make up a bit over 30,000 tonnes in all.
The rest is held by individuals in the form of gold jewellery
[approx 70,000 - 80,000 tonnes], coin and privately held
bullion [combined at 20,000 tonnes].
90% of the gold above ground has been mined since the start
of the California gold rush in 1848. Modern power machinery
and chemicals have steadily lowered the price at which gold
can be extracted. The average production cost of the world's
biggest producer - South Africa - is about $238 per troy
ounce. 1997 industry estimates by the Federal Reserve Board
suggested an average production cost worldwide of $300 per
ounce.
Gold still underground
Where it is known about with reasonable confidence, and
can be extracted economically, un-mined gold appears on the
books of mining companies as ‘reserves’. There
remains as reserves about 40% of the total of gold above
ground - i.e about 50,000 tonnes. South Africa has 50% of
the world's known stock of un-mined gold.
Inelastic supply
Gold is difficult to find in commercial quantities. It also
takes time, typically 5 years, and plenty of money to bring
mines into production. In this sense the supply side of the
gold equation is relatively constant.
One of the features of this is that boom times encourage
investment which takes a considerable time to work through
to production and - eventually - to worked out mines. After
a boom, when investment decisions may be made on over-inflated
expectations of ultimately achievable prices, there is a
tendency to subsequent overproduction and poor prices for
a considerable period.
The gold price boom of 1979/80 resulted in steadily increasing
production all over the world from a stable base of 1200
tonnes annually to a peak of above 2600 tonnes in 1999. All
major producing countries except South Africa substantially
increased production in this period.
Production then levelled out and started to dip slightly,
as mines were exhausted and poorer mines shut. Also the uninspiring
gold market encouraged a decrease in exploration which now
means there are a lower number of new mines coming into production
than is expected to be required by the market.
Inflation of the gold supply
Nonetheless for the time being gold is still being mined
and refined at the rate of almost 2,600 tonnes per year.
Thus the world supply of above ground gold is increasing
- or inflating - at just over 2% annually. At current rates
the gold supply is growing the under-sized tennis court cube
at about 12 centimetres a year. It will reach a full tennis
court sized cube in about 20 years time.
Physical gold quantities
The following table compares kilogram quantities of gold
with monetary values, spatial volumes, and meaningful human
measurements, to get a feel for the numbers.
| Kilograms | Value @ 390$ / Oz | Litres | How much |
|---|
| 0.008 | $100 | 0.00041 | A British sovereign coin |
| 0.031 | $390 | 0.00161 | US Eagle / Canadian Maple coin |
| 0.100 | $1,254 | 0.00518 |
| 0.500 | $6,269 | 0.02591 |
| 1 | $12,539 | 0.0518 | 1 kilo - a golf ball sized
sphere |
| 2 | $25,077 | 0.1036 |
| 3 | $37,616 | 0.1554 |
| 4 | $50,154 | 0.2073 |
| 5 | $62,693 | 0.2591 |
| 6 | $75,231 | 0.311 | A can of 'Coke' |
| 7 | $87,770 | 0.363 |
| 8 | $100,309 | 0.415 |
| 9 | $112,847 | 0.466 |
| 10 | $125,386 | 0.518 |
| 12 | $156,000 | 0.645 | A standard 400 oz bullion bar |
| 20 | $250,772 | 1.04 | A litre bottle of water |
| 50 | $626,929 | 2.59 |
| 100 | $1,253,858 | 5 | A good sized deposit box |
| 1,000 | $12,538,580 | 52 |
| 10,000 | $125,385,802 | 518 | Half a cubic metre - fits in a corner of a small bank
vault. |
| 100,000 | $1,253,858,025 | 5,181 | |
| 1,000,000 | $12,538,580,000 | 51,813 | A small living
room - and more than twice Britain's gold reserve. |
| 8,139,000 | $102,051,504,000 | 421,710 | The US gold reserve fits into a town house. Fort Knox is mostly empty space! |
| 30,000,000 | $376,163,190,000 | 1,554,404 | The
world's total financial reserve of gold (central banks + significant global
financial institutions) |
| 100,000,000 | $1,253,858,024,000 | 5,181,347 | The approximate total of all
privately held jewellery, bullion and coin |
| 140,000,000 | $1,755,401,234,000 | 7,253,886 | All the gold in the world -
A block with edges 3 metres short of a standard sized
tennis court. |
| $7,000,000,000,000 | | The current US sovereign debt
(which excludes future pension and health obligations, none of which have been reserved against
in the public accounts) |
|
Gold is said to be so rare that the world pours more steel
in an hour than it has poured gold since time began.
Gold is one of the world's most precious metals.
All of the gold in the world could be compressed into an
18-yard cube, which is about 1/10 the mass of the Washington
Monument.
It is recorded that only 88,000 tons of gold have been taken
from the earth since recorded history, leaving far more yet
to be discovered.
A one-ounce gold nugget is more rare to find than a five-carat
diamond.
The amount of gold nuggets being found in the world is less
than one percent.
Even though gold is rare, it is far easier to find than
winning a major state lottery.
Because of its rarity, a gold nugget can be worth three
to four times the value of the gold it contains.
An authentic gold nugget has long been considered a gemstone
because of its rarity and beauty.
Gold is so heavy that one cubic foot of it weighs half a
ton.
Gold is six to seven times heavier than other materials
that equal its size.
The largest gold nugget found in the U.S. weighed 195 pounds;
it came from California.
Gold can be hammered so thin that sunlight can shine through
it.
A single ounce of gold can be drawn into a wire 60 miles
long.
Gold can be hammered into sheets so thin that a pile of
them an inch high would contain more than 200,000 separate
sheets.
In every cubic mile of sea water there is 25 tons of gold!
That's a total of about 10 billion tons of gold in the oceans;
however, there's no known way to economically recover it.
Gold is considered one of the most important metals in jewelry
making.
Gold is so soft it is seldom used in its pure form.
Jewelry that is marked 10K is made of 10 parts gold, and
14 parts other metals.
The hardness of pure gold (on moh's scale) is 2-1/2 to 3;
the melting point is 2,063 degrees Fahrenheit, specific gravity
is 19.32, and tensile strength is 19,000psi.
Gold can be transmitted from platinum by nuclear reaction.
But, because of the rarity of platinum, it is far too costly.
The United States government banned private ownership of
gold, which lasted 41 years; then lifted it on December 31,
1974.
Gold reached an all-time high price of $800 per ounce in
1980.
South Africa is the largest producing gold country in the
world today.
An ounce of gold is based on troy weight--20 pennyweights
or 480 grains. A pound of gold is 12 ounces, while most other
non-precious metals are based on the standard avoirdupois
scale of 16 ounces to the pound, and approximately 32 grams
to the ounce.
Gold is chemically liquified and injected into the muscles
of thousands of rheumatoid arthritis victims in the U.S.,
and it is said that the treatment is successful in seven
out of ten cases.
Gold is used in window glass and astronaut helmets to reflect
infrared rays while allowing sunlight to pass through, and
at the same time keeping it cool.
Gold is inactive chemically and is not affected by air,
heat, moisture and ordinary solvents.
The largest gold mine in the U.S. is the Homestake Mining
Company in Lead, South Dakota. |
