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Comparing the Global Supply of Precious Metals to the National Debt

In the past, the United States government used gold and silver to back its currency and allowed citizens to exchange cash for precious metals. Because the dollar’s value was tied to the price of gold and silver, the Federal Reserve couldn’t print more dollars without inflating the prices of these metals and potentially causing a run on the banks. Eventually, our financial system officially shifted to fiat currency. This made financial discipline less of a priority and allowed central banks to print more money and drastically increase the national debt. Here’s a look at the money supply in the U.S. and the amount of precious metals being mined around the world.

Changes in the National Debt and Money Supply

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In the first half of the country’s history, the Revolutionary War, the War of 1812, and the Civil War caused the largest shifts in the United States’ national debt. During this period, every dollar the Federal Reserve printed was backed by gold and silver. However, Franklin Delano Roosevelt essentially ended the domestic gold standard in 1933 by signing Executive Order 6102. This order required American citizens to sell the vast majority of their gold to the Federal Reserve. Over the next five years, the national debt grew from $19 billion to $36 billion as the federal government borrowed money to reduce the effects of the Great Depression.

The nation’s debt has continued to climb and currently sits at over $21 trillion. Similarly, the United States’ money supply (M2) has skyrocketed since 1933, going from $32 billion to $18 trillion.

How Much Gold, Silver, and Platinum Is There?

For the past few decades, global production of precious metals has increased as mining technology has improved. Here are the figures for the total supply of above-ground gold, silver, and platinum as of 2019:

  • Gold: 5.6 billion ounces, which is worth about $10.4 trillion
  • Sliver: 3 billion ounces, which is worth about $73 billion
  • Platinum: 8 million ounces, which is worth about $7 billion

Because these metals are highly durable, the figures for the above-ground totals serve as rough estimates for all of the gold, silver, and platinum that have ever been mined. This means that, as of 2020, all of the gold, silver, and platinum in the world is worth less than half of the national debt.

Does It Make Sense to Invest in Precious Metals?

Precious metals are finite resources, and industry experts have begun to question if we have reached a tipping point. These metals have been mined on an industrial scale for almost two centuries. Many of the world’s largest mines are coming to the end of their lifecycles, which would make gold, silver, and platinum even more valuable. If at some point, we go back to a commodity-backed currency, we would expect for gold, silver, and platinum to dramatically increase in price, as the amount of debt is substantially more than the nation’s precious metals reserves. Precious metals also help diversify investment portfolios because they serve as a safeguard against inflation and retain their value during economic downturns.

Are you interested in investing in precious metals? Connect with the experts at Atlanta Gold & Coin Buyers for advice and a transparent appraisal for buying or selling gold, silver, and platinum bullion. We have decades of experience in the industry and are familiar with coins, bars, and ingots made of precious metals. To set up an appointment, call us at (404) 236-9744.

Tony Davis
Tony Davis