Bill Holter (The Holter Report) recently published an article which included some math concerning the world’s supply of gold. According to Holter, the best estimates of the total “stock” of existing gold (all the gold that’s accumulated for at least 3,000 years) is roughly 170,000 tons.
If we divide that 170,000 tons of gold “stock” by the world population (7 billion), the result is about three-quarters of an ounce of gold per person.
In addition, the world mines and adds an additional 2,600 to 2,700 tons of gold each year. That works out to about 1/85th of an ounce of “new” gold mined each year for each person on the planet.
Holter’s math raises some implications and questions:
- There’s less than one ounce of gold per person in the world. That’s a very small supply.
- Although Holter didn’t say so, much of the total stock of hold is held by a few government and banks. Thus, the total supply of gold available for sale or private purchase is even smaller than the 170,000 ton “stock”.
- The number of people who want gold is unknown, but probably includes virtually every adult on the planet. That’s a very large potential demand.
- Given the tiny supply and huge demand, does the price of $1,300 an ounce make sense? Does common sense suggest to you that a $1,300/ounce price is the result of a free market reflecting the true forces of supply and demand—or is that price the result of a manipulated market that defies the forces of supply and demand?
On top of Holter’s math, implications and questions, let’s add the world’s total debt to our calculations.
According to Max Kaiser, the total world debt is about $233.3 trillion. That has to be a conservative estimate since it can’t include the total supply of derivatives which some people value at over $1 quadrillion.
Even so, if we divide Kaiser’s conservative estimate of the total world debt by the total world population (7 Billion), we learn that the global debt averages out to (at least) $33,000 for every man, woman and child on the globe.
Let’s divide that $33,000 by the average per capita amount of gold (3/4th ounce) available on the planet. By doing so, we learn that (in theory) the entire global debt might be backed by gold if the price of gold were raised to about $44,000 per ounce.
I’m not suggesting that the entire world debt will be backed by gold anytime soon or even ever. But I am suggesting that backing the entire world debt with gold is absolutely possible—if we raised the price of gold to something like $40,000 to $50,000 per ounce.
More, while I don’t expect the price of gold to reach $50,000 an ounce in my lifetime, a price of $25,000/ounce doesn’t seems irrational.
I’m not predicting $25,000 gold, but if the fiat dollar collapses (as seems inevitable) and if the world returns to a gold-based monetary system (which seems likely), $25,000 gold is a reasonable possibility.
Can anyone say that the fiat dollar absolutely won’t collapse within, say, five years?
Can anyone say that in the aftermath of that collapse, the world won’t be forced to return to a gold-based monetary system?
Can anyone say that gold can’t hit $25,000—a 1,900% increase—within the next five years?
Can anyone identify any other generic investment in stocks, bonds, land, etc. that has even a remote chance of increasing in price by 1,900% over the next five years?
$25,000 gold in the next five years is not a sure thing.
But it’s not a remote possibility either.
Govern your investments accordingly.