04 June 2008

How much gold is there?

The World Gold Council states that the total amount of gold ever mined is 158,000 tonnes, which we can round out to 5,080,000,000 ounces. I haven't been able to find out the methodology of how this number is calculated, would love to know. According to them this is composed of:

2,630,000,000 oz in jewellery
600,000,000 oz in industrial applications
830,000,000 oz held by private investors
915,000,000 oz held by central banks
105,000,000 oz unaccounted for

So we can clearly say that investment holdings are the 830 + 915 = 1745 million ounces (and for the point I'm making it is irrelevant if you believe central banks actually have it or not, if they don't have it, then someone else must). Most of the industrial stuff would be in non easily recoverable form (electronics etc), so that we can consider as not likely to come onto the market. Some of the "jewellery" could be considered investment (especially in India) with the rest of the stuff around Western women's necks only likely to come on to the market if the price was really really high, so at the moment can be considered non-investment (or long-term core deep investment holdings, depending on your viewpoint). Lets assume 9.7% of the jewellery is really investment, for no other reason than 1745 + 255 = 2 billion ounces, which is a nice round number.

So there is 2 billion ounces of gold out there as investment. As I mentioned in my last post on short-term trading, there isn't much transparency in the gold market. So what can we see?

Below is a chart of all the gold products/systems/ETFs, which I have been tracking weekly since 2003. Who is in this list? Well the big ETFs (World Gold Council's Gold Bullion Securities Australia, South Africa, UK, USA & Barclays USA), Central Fund of Canada, GoldMoney, e-gold, BullionVault and Milenium Bullion Fund.



The total ounces of these products comes out at 28 million ounces. COMEX warehouse stocks in March 2008 were 7.5 million. TOCOM stocks April 2008 were 270,000 oz. That means the total "transparent gold" the trader can analyse the movements of is approximately 36 million ounces.

That is about 1.8% of the 2 billion we estimate is out there. Looks like we have a little bit of way to go before we are fully informed.

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