What If Everyone in the World Wanted a 1-ounce Gold Coin?
September 25, 2009 – 3:48 pm
What If Everyone in the World Wanted a 1-ounce Gold Coin?
By Jeff Clark, Senior Editor, Casey’s Gold & Resource Report
If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around?
According to the U.S. Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Groupa highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics, and dental. So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we’re already short. Those towards the end of the line are out of luck.
However,
it’s worse than that. Of all the physical metal ever mined…
-
2.1 billion ounces, or 43%, is found in jewelry, decorative, and religious items.
-
Private stock – gold already held by various private parties – accounts for 1.1 billion ounces.
-
Official reserves (central banks, IMF, etc.) stand at 1 billion ounces.
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Industrial use accounts for 530 million ounces.
Very little of this is likely to come available for purchase in coin form. After all, you’re not selling any of your gold, and neither are many banks or institutions. Most everyone is
buying.
So for those who don’t yet have a gold coin (or you greedy investors who want more than one), this pretty much leaves us with mine production and scrap sources.
CPM forecasts that total new supply in 2009 will be around 122 million ounces. Only a small percentage of this is made into gold coins and bars, but if all of it were, it would amount to less than two one-hundredths of an ounce, or about half a gram, for every man, woman, and child on earth this year. A product of this dimension is about half the size of that small button on your shirt collar.
Since this supply is only available annually, it means 0.018% of the global population – one in every 55 people – could buy a one-ounce gold coin this year. Or, said differently, it would take 55 years before everybody had one, assuming the population never increased (it is) and supply never decreased (it is).
But it’s worse than that. Actual 2009 coin production will be around 5 million ounces (excluding medallions or “rounds”), leaving two one-hundredths of a gram of gold (or 0.3 of a grain) available this year for each of the planet’s inhabitants. This is about half the size of the sesame seed that fell off your hamburger bun at dinner last night. It means that only 0.0007% of earth’s citizens – or one in 1,356 – can buy a one-ounce gold coin this year, and it would take 1,356 years for everyone to get one.
How’s that for a supply squeeze?
But it’s worse than that. Demand continues rising. Gold is more frequently in the news, attracting more customers every day. Hedge funds, which never before considered gold, are now buying physical metal (Greenlight Capital actually sold $500 million of GLD and bought physical gold). Central banks are net buyers of gold for the first time in 22 years. China is running TV ads encouraging its citizens to buy gold and silver. Last month Russia bought more gold than they actually produced. In a recent survey, 20 out of 22 fund managers bought physical gold for their personal investments. In other words, some investors are already scrambling to get it… and in big quantities.
But it’s worse than that. Most of the ramifications of the money printing and dollar debasement haven’t even surfaced yet. How will the general public react when the dollar is crashing and standards of living are threatened? What will they do when milk and gas prices surge to twice what they are now? How will the greater collective respond when they lose faith in government interventions? Where will they invest when they see gold and silver prices screaming upward and don’t want to be left behind?
The panic into gold by the general public hasn’t begun yet. Available supply is scarce and will get smaller. There won’t be enough.
Better get your speck while you can.
[The current issue of Casey’s Gold & Resource Reporthas a few charts that should come with a warning. We examined just how small the gold and silver markets are, and “explosive” barely describes the potential. If you want to check it out for yourself, consider a trial subscription – 3 full months with 100% money-back guarantee. Click here for more.]
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Tags: cnbc, collapse, commodities, depression, dollar, Economy, Federal Reserve, gold, Jim Rogers, money dollar, recession, silver, stock market
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4 Responses to “What If Everyone in the World Wanted a 1-ounce Gold Coin?”
Mr. Clark,
Your whole premise is flawed. Gold has always been the best currency not because of its quantity, but for its ability to adjust to market demands. So if all the world needed gold, then the price per whatever unit of it would adjust accordingly. It is gold's scarcity which imbues it with value, and the higher the demand, the more value is placed on even the smallest unit. This argument of there not being enough gold in the world is used over and over again by the establishment in order to discredit gold as a global currency. It is however, false.
By Ralphy
on Sep 26, 2009
Epiphany – One point I have read about concerning gold confiscation was that when FDR confiscated gold from the people, the US dollar was still backed by gold. Control of the gold, then, was control of the value of the dollar. The removal of the gold standard by Nixon was to allow for expansion of the value of the dollar in a different way, which led to oil being the dollar backing. I don't know if confiscation of gold today would have the same economic effect as it did in the 30's since the US dollar is no longer backed by gold. However, if a new currency were to be installed and backed by, say, gold, then all bets are off i would guess.
PS my mom told me that her family never gave up their gold. They kept it hidden and is, today, still in the family.
By tribeseeker
on Sep 26, 2009
I was under the impression that the Federal Government still maintains the right to confiscate all private gold holdings. That although under Nixon they allowed private citizens to once again own gold, that if there were an actual economic emergency, such as we are currently facing, the government is likely to just seize your gold, without any compensation whatsoever. So any investment in gold to obtain some stability for a rainy day is pointless if the government takes your gold as soon as the rain clouds start to form.
They did it in 1933 and unless I am wrong, they would do it again. Especially if the US Dollar were to collapse or ever appear to collapse. And I further understand that Americans are still barred by law from owning gold in foreign countries. So what would be the point of investing in gold if it was simply going to be confiscated? And, under the law, as far as I understand it, you could even be imprisoned for owning gold?
Sure, you might be able to hide some coins or even small bars. But how would you spend it?
If I am wrong about any of this and the laws have indeed changed completely to bar government seizure, please let me know. I have tried to research the current laws and all I find suggests that although you can own gold now, the seizures are still a government option readily available.
By Epiphany
on Sep 26, 2009
what a silly topic. suggest it is better to get involved to make change, instead of plan for the after affects of years of lack of involvement.
By tony
on Sep 26, 2009