Steve St. Angelo Steve St. Angelo

Steve St. Angelo

August 21st, 2017 Comments

Unfortunately for precious metals investors, there continues to be a great deal of misinformation about how much gold there is in the world. The biggest culprit that confuses precious metals investors is what I call, LOUSY CONSPIRACIES. Those who promote these unsound conspiracies aren’t able to differentiate between FACTS and FICTION.

This will be a short post, but it is important as it will lay some groundwork for articles to come out over the next several weeks in comparing the new Bitcoin-Crypto currency market to gold and silver.

How Much Gold is in the World?

The World Gold Council estimates that about 190,040 metric tons of gold has been mined throughout history. In addition, the U.S. Geological Survey (USGS) reports that approximately 57,000 metric tons of gold are yet to be discovered. Therefore, the total amount of gold in the world, both discovered and undiscovered, is approximately 247,040 metric tons.

Gold Conspiracy

While conspiracies do indeed take place, they are based upon sound reasoning and evidence that either proves a conspiracy has occurred or proves the official story is bogus. On the other hand, lousy conspiracies are easy to dismiss when facts and sound evidence are brought forward. Unfortunately, even when the facts or the evidence is presented step by step, those who either promote or believe these lousy conspiracies… continue to do so.

This has to be one of the most frustrating areas of my research, writing, and analysis. Why? Because I receive emails at least once a week bringing up one of my favorite LOUSY CONSPIRACIES.

One of the more insane conspiracies in the precious metals community is the notion that the world has 1-2 million tons of gold hidden in secret vaults. Some of these vaults are the infamous Yamashita’s Gold Treasure, Nazi Gold Vault, Bank of Hawaii Massive Gold Holding, etc.

You see conspiracies, especially LOUSY CONSPIRACIES, are a great way to make a buck selling a newsletter or book. Because people don’t take the time to do the research and fact-check, it’s much easier and a great deal more fun to believe in the hype of a conspiracy. This is quite a shame because lousy conspiracies give the few sound conspiracies a bad reputation.

Even though I wrote about this back in April, CONSPIRACY vs FACT: How Much Gold Is In The World??, it seems necessary to discuss this once again as an introduction to why gold and silver will still be better quality stores of wealth versus cryptocurrencies over the medium to longer term. This goes against some of the recent analyses put out in the Alternative Community suggesting that gold will no longer have value in the future due to cryptocurrencies taking over the role of a new digital monetary system.

Gold World Production

Anyhow… the production of silver and gold are extracted out of the ground at a certain ratio. Recently, it is approximately 9 to 1, silver to gold. Let’s take a look at the following two charts:

World Gold Production 1493-2016

World Silver Production 1493-2016

As we can see in these two charts, most of the world's gold and silver production has been extracted since 1900. For gold, the world produced 91% of all gold since 1900, and 81% of all global silver production. According to the best sources (shown at the bottom of the chart), there have been approximately 173,000 metric tons (5.5 billion oz) of gold produced since 1493 and 48.5 billion oz of silver. This turns out to be a 9 to 1 ratio, which is the same as the ratio of silver to gold in the ground.

NOTE: I did not convert the gold chart to million oz because world production figures are normally reported in metric tons. Furthermore, the accounting of total gold holdings is also published in metric tons. Also, this conversion should help: (1 metric ton = 32,150 oz).

Now that we know that, it is also true that the world produced a great deal more silver in relation to gold from 1493-1600. This was due to the huge new silver discoveries in South America by the Spanish during that period. There was 747 million oz of silver produced from 1493-1600 versus 714 metric tons (23 million oz) of gold… 32 times more silver production than gold.

Silver VS Gold

Furthermore, the silver-to-gold production ratio increased even higher in the 17th century (1600-1700). World silver production jumped to 1,272 million oz versus 897 metric tons (29 million oz) of gold. This pushed the silver-to-gold production ratio to a staggering 44 to 1. The increase in ratio was due to the huge ramp-up of Mexican silver production during the century.

Okay…. some of you might think… well, what if some of the world's gold production was missed during those earlier centuries because the silver-gold ratio was so high? Even if we apply a 9 to 1 silver-to-gold ratio for each century, this would be the result:

Adjusting World Gold Production To 9-1 Silver To Gold Ratio Each Century

1493-1600 = 83 million oz Gold

1600-1700 = 141 million oz Gold

1700-1800 = 209 million oz Gold

1800-1900 = 566 million oz Gold

1900-2016 = 5,077 million oz Gold

Grand Total = 6,076 million oz Gold (189,000 metric tons)

Even if we applied a 9 to 1 silver-to-gold production ratio for each century, it would still only amount to 189,000 metric tons versus the 173,000 metric tons of actual world gold production since 1493. If we include all gold production before 1493, I doubt it would push that figure above 200,000 metric tons.

So, we can see, it was physically impossible for the world to produce more than 200,000 metric tons (6.4 billion oz) of gold in the history of mankind. Thus, the notion that the world holds 1-2 million tons of gold in the world, is completely ludicrous.

For the life of me… I am completely puzzled as to why people can’t comprehend the obvious when it comes to the true amount of gold in the world.

UPDATE: Additional Information On Ancient Egyptian Gold Production

I have received some emails and tweets suggesting that a lot of ancient gold production has not been accounted for. While this is true, it doesn’t amount to much if we use logic and quantitative statistical modeling. We must remember, the ancient peoples were using simple mining techniques to produce gold. While Ancient Egyptians did produce a lot of gold, estimates show that it didn’t amount to much compared to modern times.

Here is an excerpt from a study on Ancient Egyptian Gold Mining:

Archaeological and historical sources suggest that Egyptian metal-workers as early as 4,000 B.C. had developed remarkably sophisticated gold-smithing skills. In the millennia before the beginning of the Christian era, Egypt was in all likelihood both the largest consumer and producer of gold in the Eastern Hemisphere. During this period, estimates show that Egypt consumed four-fifths of the gold production of the ancient world. By 1,500 B.C. Egypt’s production of gold reached an estimated 1.4 million pounds.

Estimates of Ancient Egyptian gold production up until 1,500 B.C. were 1.4 million pounds or 635 metric tons. This was 635 metric tons over 2,500 years. According to the 2017 GFMS Gold Survey, the world produced 3,222 metric tons of gold in 2016. Thus, the world produced five times more gold last year than the total the Ancient Egyptians mined for approximately 2,500 years. And as the excerpt above stated, Egypt was the largest producer and consumer of gold in the Ancient world.

If we consider gold production from other ancient periods, such as the Roman Empire, Ancient Indian Empires, and Asia, we still don’t come up with the sort of gold that was produced since 1900. Again, I doubt the world has produced more than 200,000 metric tons in the history of mankind. Hell, I would even go as far as say 225,000 metric tons. But, this is still a great deal less than the 1-2 million tons suggested by those who seem to be unable to do simple math.

Steve St. Angelo

About the Author:

Independent researcher Steve St. Angelo started to invest in precious metals in 2002.  In 2008, he began researching areas of the gold and silver market that the majority of the precious metal analyst community has left unexplored.  These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.