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How Much Gold Exists in the World?

GoldSilver Team 

The question of how much gold exists in the world is often asked and is an important one.  It’s not only of interest to the simply curious. Knowing how much gold we have is also critical to grasping the future dynamics of supply and demand and what the future price of gold might look like.

The correct answer, as it turns out, is a lot--and a little.

That’s a seeming contradiction.  It isn’t, really, but in order to understand what it means we have to go back to the beginning and ask another question:

Where did gold originally come from?

No one knew for certain, for all of our species’ history. Scientists have been trying to figure it out, ever since the alchemists of the Middle Ages failed to show that it was created through the transmutation of lead. But discerning the truth has been quite the ongoing detective story. In modern times, researchers had what they believed to be a very good theory—that gold appears as a result of nucleosynthesis during a supernova.

Confirming the Hypothesis

Turns out they were right.  However, it wasn’t until just a few months ago that they got their proof.

On the morning of August 17, 2017, a gravitational ripple in space hit our planet. It was minuscule, way below the capability of mere humans to feel it. Nevertheless, it was detected by extremely sensitive instruments at the Laser Interferometer Gravitational-Wave Observatory (LIGO). (LIGO consists of two widely separated installations within the United States—one in Hanford, Washington and the other in Livingston, Louisiana—and which operate together as a single observatory.) Though the ripple felt by LIGO was a tiny one, it was the result of an epic cosmic cataclysm, as a pair of faraway neutron stars collided at one third the speed of light. If it had somehow happened here, there’d be no more solar system.

Neutron stars are objects we can barely envision.  They pack one-and-a-half times the mass of the sun into a ball the size of a small city, only 10 miles in diameter. A teaspoon of that mass would weigh 10 million tons. When two of them hit head-on, it’s almost like we’re experiencing Big Bang déjà vu all over again.

Once the collision was detected, astronomers around the world recognized it as a once-in-a-lifetime opportunity, and they went frantically searching for the source of the gravitational wave ripple. It took only 12 hours before they located a brand new star–called a kilonova–about 130 million light-years from Earth. At that point, the best telescopes ever built, including the Hubble, were all turned in the same direction. 

It was a race against time to capture the light radiating from this gigantic cosmic fire before it winked out. Sure enough, within days the visible light faded away, leaving only infrared light, which eventually disappeared as well.  But while it was visible, observers could break that white light into a spectrum, lines whose peaks and valleys mark the presence, like fingerprints, of different elements.  They nailed them.

The Birth of Gold

The spectrum of this kilonova contained the fingerprints of the heaviest elements in the universe. It was an exciting moment: Scientists were, for the first time, able to watch neutron-star material decay.

And to see gold being born.

Those neutron stars are now massive clouds of dust, dispersing through space. They’re similar to the dust from which the solar system eventually coalesced. 

During its formation, the early Earth was molten, and iron sank to its center to make the core of our planet. The iron took with it all the heavy metals, such as gold and platinum.

Gold on Earth

So when we say that there is a lot of gold in the world, that’s true. It’s estimated that there are enough precious metals in the planetary core to cover the entire surface of the Earth with a layer four meters thick. On the other hand, when we say it’s rare, that’s also true--the problem being that all that original gold is deep within the earth, not on it. We can’t get at it. And we never will.

Because of how Earth was put together, there should be little to no gold in earth’s crust, yet there obviously is. We know that. We mine it. We wear it on our bodies. Sometimes we even find pure nuggets of it on the ground or in streams. In fact, precious metals are tens of thousands of times more abundant in the Earth's silicate mantle than they should be.

Why?

Or to put it another way, if all the gold sank to the core when the planet solidified, where did your wedding ring come from? Another question that has intrigued scientists.

Gold Imported from Space

The going theory was that gold was imported via meteorite impacts during what is known as the Late Heavy Bombardment, billions of years ago. In 2011, that theory was confirmed by researchers from the Isotope Group of the School of Earth Sciences at the University of Bristol in England.

These scientists analysed rocks from Greenland that are nearly four billion years old. Their conclusion, according to Dr. Matthias Willbold: “most of the precious metals on which our economies and many key industrial processes are based have been added to our planet by lucky coincidence when the Earth was hit by about 20 billion billion tonnes of asteroidal material.”

Lucky indeed.

The impacting meteorites were stirred into the Earth's mantle by process of convection and deposited here and there. And voilà, humans had access to enough gold to foster the rise and fall of empires; to make an entirely adequate supply of coins, rings, bracelets and bling for thousands of necks; and eventually to help create smartphones, computers, GPS units and high-def television sets. 

Now, we know that most gold is locked up in the planetary core, yet there’s enough available for the purposes to which we put it. We seem to have all we need. But in total, how much is there, anyway?

That should be a relatively simple question. Gold is indestructible. It’s impervious to the elements. It doesn’t oxidize and crumble away. It never goes anywhere. All of our gold—whether mined at a few grams to the ton or discovered in magnificent nuggets on the ground—is still around. Think about that the next time you remove your ring to do the dishes. That gold came from outer space and it’s billions of years old. Although it may have been mined recently, it also may have made a very long trip to your third finger that included stops in ancient Rome, the Incan Empire or 17th century Spain. You never know. Contemplating gold’s history is a humbling experience.

SIDEBAR—The everlasting nature of gold may be about to change, as more and more of it goes into our electronic devices. Which eventually end up discarded and sent to landfills. Which means the gold is gone. The British Geological Survey says that about 12% of current world production migrates to this sector, where each product uses such small quantities that recycling is not practical. (Although at least one innovative company has developed a technology it claims can economically recover the gold from our electronic scrap heaps.)

How Much Gold is There? Can we Add it Up?

Well, maybe not.

Turns out, estimates of the amount of gold sitting on the surface of the planet vary widely. Warren Buffett says that if melted down it would all fit into a cube 20 meters on a side. That jibes with estimates—such as that from precious metals consultancy ThomsenReuters GFMS—which come in at somewhere around 165-170,000 tonnes. 

For convenience sake, we'll use the metric measurements that are standard to the industry. Smaller quantities of gold are generally expressed in troy ounces, each of which is about 1.1 times the weight of our avoirdupois ounce. Large quantities are expressed in tonnes, which are 10% larger than our ton, at just over 2200. And one tonne = 32,150 troy ounces.

Buffet's cube would look something like this:

All the gold in one cubeImage courtesy of Demonacracy.info 

That tonnage is probably a little low since the estimate is a couple of years old and we’ve been adding to the world stockpile at a rate of a little over 3,000 tonnes/year since 2015.  So perhaps we’re up to 175,000 tonnes or more.

Or is that figure too low, maybe way too low?

This is the contention of the folks over at the Gold Standard Institute, who have run their own numbers and come up with a wildly different estimate, 2.5 million tonnes—though they do admit that the evidence is sparse and the figure is rather “speculative,” and few agree with them.

Others believe the opposite. Whereas GFMS pegs production prior to 1492 at 12,780 tonnes, James Turk of GoldMoney believes that’s an overstatement. He notes that the primitive nature of early mining techniques means the figure is probably closer to 300 tonnes, bringing the total down by nearly 12,500 tonnes.

And there are two further complicating matters.

  1. One is so-called “artisanal” mining, the general term applied to local attempts to extract gold in remote locations, outside of the world’s formal corporate mining structure. No one knows how much is produced in this way. It could be a significant quantity, or not.

  2. The other is the lack of transparency in Chinese mining. Back in 2007, it was announced that China had passed South Africa as the world’s largest producer. For the record, the country admitted to mining 463.7 tonnes of gold in 2016. Or maybe it was a lot more. We don’t really know because China doesn’t export gold and production figures are held close to the vest. Many observers believe that the Chinese government deliberately understates production in order to conceal the true size of its rapidly-growing national hoard.

Whatever the case may be, what we do know for sure is that aboveground gold stocks are on the move, because of the supply/demand disparity. As noted, annual world production is around 3000 tonnes. Compare that with demand which, according to the World Gold Council, reached a three-year high of over 4300 tonnes in 2016. Gold is going from someplace to someplace else, but where the extra 1300 tonnes came from, and where it went, is not clear.

Whatever the case, here’s the rub. Assuming that demand simply remains steady over the near term—far from a certainty, as sophisticated electronics continue to expand their global market penetration—it seems inevitable that we’re going to run out of gold. Sooner rather than later.

All of the big, easy-to-get-at deposits have probably been found already. That leaves miners working digs with smaller and smaller net grams-per-ton. For example, Northern Dynasty’s Pebble project in Alaska—one of the largest deposits in the world—grades out only between a third and a half of a gram of gold per tonne of material. It’s possible but tough to make the economics work at those levels.

Further problems involve stiffened resistance worldwide from local governments, native peoples, and environmentalists. 

Will more gold likely be discovered?

Sure. But whether any of it can be economically recovered is another question. 

Gold in the World’s Oceans

Some optimists look to the oceans. Now it’s true that there is gold dissolved in seawater, to the tune of an estimated 20 million tonnes. But it is so dilute that each liter contains, on average, about 13 billionths of a gram of gold. The person who invents a machine to efficiently suck that gold from the sea will be hailed as one of the all-time geniuses.

The sea floor is another potential source. There is a lot of gold on or in the seabed. Trouble is, most of it is down there at depths of a mile or more beneath the surface. Mining at those depths is a challenge that may be overcome someday, but we’re not there yet.

Gold in Space

Other visionaries are looking beyond the home planet. 

  • Gold on the Moon: Can we mine the moon? Well, not yet. But we probably will, because the lure is irresistible. Satellite imaging has shown that the top 10 centimeters of soil at the south pole of the moon appear to hold about 100 times the concentration of gold of the richest mines in the world. NASA has begun accepting applications from U.S. companies to build robots for lunar prospecting, the first step toward creating a mining base on our neighboring satellite. That’s a ways off, but no longer laughable. Not with companies like SpaceX so heavily involved in perfecting the economic manufacture and reusability of launch vehicles. We’ll get there.

  • Gold from asteroids?: Yep, that too. Since asteroid ownership was made legal in 2015, some private companies have their eyes on asteroid 2011 UW158; it’s small, but its metal content, including gold, is estimated to have a value of more than $6 trillion. One of those companies, Planetary Resources, has already scheduled the launch of its Arkyd-6 satellite for January 2018. Only about the size of an inkjet printer, Arkyd-6 will carry imaging technology that is to be tested for use in future generations of the company’s asteroid-surveying spacecraft.

  • Gold on Mars?: Um, yeah, but…let’s not get too carried away here. It’s all great fun to speculate about, but it is of course just science fiction on its way to becoming science fact somewhere down a long and winding road.

The Amount of Minable Gold on Earth

What is of more concern is gold we can access in the here and now, depending solely on planet Earth.  When estimating our global reserves, then, it’s probably best to be conservative. The U.S. Geological Survey has done just that. After reviewing all currently known in-ground resources, the USGS determined that there remain only about 52,000 tonnes of minable gold.

A mere 12 years’ worth, at present demand levels.

And if that suggests a supply crunch to you, you’re right.

The only way producers can respond is to bring currently-unprofitable mines online or develop new mines atop very low-grade deposits. Perhaps that kicks the can down the road for a while. But the reality is still that at some point we run out of economically minable gold, and that point is going to arrive well before we’re working the moon.

The inescapable logical conclusion, looking just a few years out, is that higher gold prices are baked in the cake.

Conclusion:

It’s unclear exactly how much gold exists in the world.

Estimates range from 165,000 tonnes all the way up to 2.5 million tonnes.

What we do know is that much of the gold supply here on earth is inaccessible– or at least not practical to mine for at the moment.

The gold supply here on earth is running out, and we’ll need to develop some pretty sophisticated mining techniques if we’re going to reverse that trend.

In the meantime, the scarcity associated with gold, along with its long history as a proven store of value, makes gold coins, gold bars, and gold jewelry solid investments for investors of all levels. There are also many other reasons to invest in gold- but you probably already know that.

As we all know, gold is the money of kings.