Off time - no update Fascinating Information Regarding the World’s Gold Supply

Fascinating Information Regarding the World’s Gold Supply

Gold Supply

We came across some fascinating information regarding the scarcity and production of gold, as well as the top gold producing countries and holders of gold that we thought we’d share with our readers.  Below are some of the highlights from an infographic presented by Gold Corp, as well as some additional research that we conducted on the availability and scarcity of gold.

Scarcity

Very few individuals would argue that gold is a scarce metal and that it’s expensive to mine.  In fact, the cost to mine and produce one ounce of gold is close to the current spot price of $1,300 an ounce.  However, to put the scarcity of gold into perspective, it is estimated that there’s only one gram of gold for every 250 tons or 550,000 lbs. of earth.  An incredible amount of earth must be uncovered to produce the equivalent of $42 worth of gold.  Additionally, considering that the overall ore quality has been declining in recent years, it’s likely that more earth will need to be moved in the future to produce the same amount of gold.

Availability

An estimated 166,000 tons of gold is currently available above ground and approximately 116,000 tons of gold remains underground, but what is more interesting is that only 56,000 tons of the below ground gold (less than 50%) will ever be recovered and enter the supply stream.  This means that at some point in time we’ll likely hit peak gold, much like we will with peak oil.  Considering that ore grades are deteriorating, it’s becoming costlier to mine, and we 33% more gold is expected to be mined and brought into the production supply, it’s likely that the price of gold will continue to rise, if nothing more than due to supply and demand factors.

Top Producing Countries

A number of countries throughout the world account for the roughly 2,900 tons of gold produced in 2013, but we’re going to limit our discussion to the top six gold producing countries, which in order are as follows: China, Australia, Russia, United States, Peru and South Africa.  While most of these countries produce gold coins, bars and jewelry, which are exported to other countries, China has passed a law prohibiting the exporting of gold, so we would expect for Chinese gold holdings to increase dramatically in the coming years; especially considering that they produced over 437 tons of gold in 2013.

Top Official Holdings

This number can be a bit misleading, as it only accounts for the amount of gold that countries have reported as official holdings, but through 2013, the top official holders of gold bullion (in order) are as follows:  United States, Germany, Italy, France and China.  According to the infographic produced by Gold Corp and available on visualcapitalist.com, China’s official holdings are slightly over 1,000 tons; however, it’s widely believed that China may have more along the lines of 2,710 tons of gold holdings, which would make it the second largest holder of gold reserves in the world.  Additionally, considering the rate at which China has been accumulating gold, they may surpass the gold holdings of the United States by 2030.

Summary

In summary, as is oftentimes the case, there’s more to gold than meets the eye.  It’s helpful to put things into perspective, and it’s clear that at a rate of one gram of gold per 250 tons of earth, that it’s a scarce resource.  However, what may be most surprising to folks is that most of the gold available in the world has already been mined, and that the estimated underground gold that is likely to be mined and brought into production is only 33% more than the current available above ground gold.  At the moment, China is the top producing gold country in the world, and considering that no gold exports are currently permitted in China, its official holdings are expected to grow at a much faster rate than the other top official holders of gold bullion.

Tony Davis
Tony Davis