How Much Gold is in the World?
(And how well can we estimate?)
Silver Stock Report
by Jason Hommel, Feb 13, 2016
Two years ago, I was promoting MGN stock, a silver copper mine developer. They finally got their final permit after 11 years. Who knew it would take so long? The project was previously permitted in 1993! $100 million was spent developing the project by the previous owners, and $75 million by the current owners. Yet, the current market cap of MGN is not $175 million or more, but rather, $14.8 million.
Disclaimers: Do I own any stock? I can't. For more of the reason why, see the bottom of my facebook bio:
The company, MGN, is paying me 5000 shares to send out the notice of their final permit. This stock will probably go up a lot next week.
Gold was up nearly 4% on Thursday alone, hitting $1264/oz.!
If gold ran up 4% per day, for the 250 trading days in a year, what would that look like? 1.04 (x to the y) 250 = 18,127 x $1264/oz. = $23 million. In other words, Thursday's trading day was a "major default". In a world where interest rates are supposedly lower than 2% in a year, gold prices are not supposed to move 4% in a day, as if gold itself, or the dollar itself, were a penny stock!
Also, as of 13 days ago, the London Silver Fix is blowing up. This could well be the long awaited default that will really drive prices sky high. Like the default of the destruction of the prior london gold fix in 1971.
Two weeks ago, the London fix set a silver price 84 cents per ounce below the market! That was at $13.58, instead of $14.42, on 1-29-16, 13 days ago. Silver hit a high Thursday of $16.07. So, it's more obvious than ever that they are trying to manipulate the silver price lower than it should be, and are failing. This is a gain of 18% in a week!!!
Silver Market In Disarray After Benchmark Price Fix Manipulation
For over ten years, we wondered why the producers never called out the price manipulators, and we were begging them to do so. Well, well, well, look who finally woke up?!
World's Largest Silver Producer Slams LBMA's "Manipulated" Fix
Lines Around The Block To Buy Gold In London; Banks Placing "Unusually Large Orders For Physical"
How much gold has the world produced in all of human history?
Gold.org Estimates 175,000 tonnes. A tonne is 32,151 troy ounces. Or 5.6 billion ounces of gold.
At the end of 2014, there were 183,600 tonnes of stocks in existence above ground.
"The best estimate at the end of 2011 is that arond 165,000 metric tones have been mined in all of human history."
I decided to check what gold.org reported in the past. In 2004, I reported that they reported it was 145,000 tonnes.
Assuming annual production of 2500 tonnes per year over the last 12 years, adds 30,000 to the total, taking 145,000 to 175,000. I see relative consistency here, even as other estimates range from 165,000 to 183,000 tonnes.
Next, a few people posted about Yamashita's gold in the comments in my last newslettter. And this topic of how much gold is there really in the world was discussed here in a great article:
Setting The Record Straight On The Massive Gold Supply Conspiracy
SRSrocco does not believe reports of up to 2 million tonnes of gold, and neither do I.
Bix reponds to this article, here:
Here's my opinion:
First, I agree nobody can know with exact certainty how much gold exists. The very nature of gold is that it is mostly held totally privately. And that's one of the main features, benefits, and entire beauty of gold. It is anonymous wealth. Whenever you hear the phrase, "What have you got to hide?" as if hiding things is a criminal activity, you know the questioner himself is a thief or ignoramus or totalitarian.
But this does not mean we can estimate things with surprising accuracy. I think we can.
For example, in another field, they have estimated the number of atoms in the universe to be about 10 to the 80th power. Maybe a range between 10 to the 79, or 10 to the 81st power. That's within a factor of 100, but given the number of zeros there, that's very interesting. And then there is the "problem" of dark matter, because they feel that the amount of matter should be about five to ten times higher than what they can observe, due to gravity and things being "off". LINK: WIKI: DARK MATTER
So. When I first encountered this issue of "black gold" or "unaccounted" WWII gold, back in 2004, it was an interesting topic. LINK: SILVER STOCK REPORT #32 I called it a "bombshell". And I didn't have the discernment, wisdom, or experience to be able to form a clear opinion. So, I just reported it.
Today, I view it as unjustified disinformation, and this was one of my initial feelings, but now I have more reasons for that.
First of all, the theory was that in the pre WWII era, China was able to mine, and Japan was able to steal, about 200,000 to 500,000 tonnes, which is over from 1 to 2.5 times what has been mined in the modern era of open pit mining. It's kind of silly.
It would be like someone reporting, "I travelled the world, and I discovered a secret massive city, deep in Mongolia that nobody knows about that had 70 billion people living there, ten times what is known in the rest of the world." See? It's just preposterous.
The other preposterous notions associated with this "massive gold exists conspiracy" are that it was mostly spent. The claims made go from preposterous to super preposterous, and I will quote two paragraphs from one of the key persons behind this claim at:
"The Diamond Cartel was able to amass huge quantities of stones, and yet keep prices artificially high by limiting to a trickle the number of diamonds reaching the market, maintaining the impression of extraordinary rarity. In a similar way, the black gold cartel could hold many thousands of metric tons of gold bullion -- far more than the official gold supply -- keeping gold prices artificially high while discreetly using derivatives of this gold as a clandestine slush fund."
"If the recovery of this huge mass of plundered gold was known only to a trusted few, those countries and individuals that had been robbed by the Nazis, the Fascists, or the Japanese, would not sue to recover it. Also, the argument was made that the existence of so much black gold, if it became public knowledge, would cause the fixed price of $35 an ounce to collapse."
Nope. No. Certainly not.
First, the truth is that if there was a large source of black gold, 10 times larger than all the gold mined in the world up to that point, from the pre WWII era, before modern open pit mining, which alone, makes no sense...
Then, second, it would have been long exhausted before 1971, and spent on all the things this one author claims it was already used for.
Second, the run up in the price of gold from $35 to $800, from 1971 to 1980, shows that this black gold that could have been used to cap the gold price, was long spent, and no longer available to cap the price.
Third, the run up in the gold price from 2000, from $250/oz., to $1950/oz., by 2011, again shows that this "hidden" gold, that might have been used to cap the gold price, is, again, long, long, long gone!
The main supposition, and timing, of the release of these "gold rumors" of massive pre WWII era gold, came out around 2003, and should have long since been thoroughly discredited, if only by the subsequent gold price rise, in my opinion.
Fourth, gold prices are not kept artificially high like the diamond markets. Instead, they are kept artificially low, to prop up the paper dollar. Anyone with half a knowledge of gold can see that.
Fifth, world annual gold production, and world population growth, are about the same. And the "ounce per person" ratio remains very constant! This supports the numerical estimates of the offical gold historical production of about 175,000 tonnes or 5.6 billion ounces.
Sixth, I have personally asked 4 major gold experts what they thought of the claims of there being from 2 to 10 times as much gold in the world as the official numbers, because of this "black gold, off-market gold, from pre WWII". They all think it's preposterously ridiculous, and silly, and if anything it's rumors or disinformation designed to try to talk down the gold price, and not even really worth responding to.
Seventh, if there is that much gold, say, up to 2 million tonnes, the implications are usually that it could be sold to depress the price. But the other implication would be that it means gold will be far more stable than we realize, because new mine production does not add just over 1% to total historical gold supply, but rather 0.1%. Again, I'm sorry, that just does not make any sense.
This is a great article, they use the smaller figure of 166,500 Tonnes.
In my next newsletter, I intend to try to mention a few things that I did over the years that were the least successful, and my biggest mistakes, so that you (and myself) don't make them twice.
Please leave your comments on this article online at: silverstockreport.com/2016/how-much-gold.html
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