What if Everyone in the World Wanted a One-Ounce Gold Coin?
If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around?
According to the U.S. Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Group, a highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics, and dental. So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we’re already short. Those towards the end of the line are out of luck.
However, it’s worse than that. Of all the physical metal ever mined…
- 2.1 billion ounces, or 43%, is found in jewelry, decorative, and religious items.
- Private stock – gold already held by various private parties – accounts for 1.1 billion ounces.
- Official reserves (central banks, IMF, etc.) stand at 1 billion ounces.
- Industrial use accounts for 530 million ounces.
Very little of this is likely to come available for purchase in coin form. After all, you’re not selling any of your gold, and neither are many banks or institutions. Most everyone is buying.
So for those who don’t yet have a gold coin (or you greedy investors who want more than one), this pretty much leaves us with mine production and scrap sources.
CPM forecasts that total new supply in 2009 will be around 122 million ounces. Only a small percentage of this is made into gold coins and bars, but if all of it were, it would amount to less than two one-hundredths of an ounce, or about half a gram, for every man, woman, and child on earth this year. A product of this dimension is about half the size of that small button on your shirt collar.
Since this supply is only available annually, it means 0.018% of the global population – one in every 55 people – could buy a one-ounce gold coin this year. Or, said differently, it would take 55 years before everybody had one, assuming the population never increased (it is) and supply never decreased (it is).
But it’s worse than that. Actual 2009 coin production will be around 5 million ounces (excluding medallions or “rounds”), leaving two one-hundredths of a gram of gold (or 0.3 of a grain) available this year for each of the planet’s inhabitants. This is about half the size of the sesame seed that fell off your hamburger bun at dinner last night. It means that only 0.0007% of earth’s citizens – or one in 1,356 – can buy a one-ounce gold coin this year, and it would take 1,356 years for everyone to get one.
How’s that for a supply squeeze?
But it’s worse than that. Demand continues rising. Gold is more frequently in the news, attracting more customers every day. Hedge funds, which never before considered gold, are now buying physical metal (Greenlight Capital actually sold $500 million of GLD and bought physical gold). Central banks are net buyers of gold for the first time in 22 years. China is running TV ads encouraging its citizens to buy gold and silver. Last month Russia bought more gold than they actually produced. In a recent survey, 20 out of 22 fund managers bought physical gold for their personal investments. In other words, some investors are already scrambling to get it… and in big quantities.
But it’s worse than that. Most of the ramifications of the money printing and dollar debasement haven’t even surfaced yet. How will the general public react when the dollar is crashing and standards of living are threatened? What will they do when milk and gas prices surge to twice what they are now? How will the greater collective respond when they lose faith in government interventions? Where will they invest when they see gold and silver prices screaming upward and don’t want to be left behind?
The panic into gold by the general public hasn’t begun yet. Available supply is scarce and will get smaller. There won’t be enough.
Better get your speck while you can.
Regards,
Jeff Clark
Senior Editor, Casey’s Gold & Resource Report
September 28, 2009
ShareThis
A very interesting article, Mr. Clark, but at that point, we probably won’t be able to use one-ounce gold coins very effectively….. Right now, I can find gold coins down in the one-tenth ounce and one-twentieth ounce weights, and these might be much more palatable to the local cashiers than a one-ounce coin. Today an ounce is only a thousand dollars or so, but even today, cashing a one-thousand dollar bill would certainly require “manager approval” at the very least; imagine going into the local shops and trying to buy a week’s groceries with a one-ounce coin after the price rises!
Silver might work better, at least for a while, until the cartel Ted Butler writes about falls apart; we might see some mighty expensive silver soon as well. Perhaps a roll or two of 1920′s-era dimes would be a worthwhile investment? Just to tide you over, of course, until the next government mountebank rides up with a “new, improved paper currency” to fool the next generation of children and fools. Choose well, and soon; the four Horsemen (deficits, deflation, denial and despair) are saddling up, and may choose to ride sooner rather than later.
[...] [...]
[...] [...]
PS: Forgot to add good post!
[...] Originally posted here: What if Everyone in the World Wanted a One-Ounce Gold Coin? [...]
It didn’t post, so here we go again!
This is what I posted on another blog before I ran into this.
===========================================
There ain’t nuff gold around for “everybody” even those that can afford to buy it or have money to buy it with, besides I’m not sure just why would anybody “with” gold want to take your paper dollars for it if its worth soooo much more?
So if “everybody” with enough money decides to go and buy the actual metal, it won’t go far, the major governments will own it all anyway, and it will be so high that even the millionaires won’t be able to afford it. So what do you gold freaks think will happen than? And if you have those silly “paper” gold certificates, who would want to trust another piece of “paper” that says its “backed by the full faith” lol
I got a news flash, we the lowly middle class, the ones that have street smarts and military training, will be here to help you out with its storage lol, besides you can’t eat gold or any other metals, it will be the lowly field hand and farmers that will rule if this thing you fear comes to pass. But I don’t think it will get that bad, at least not in this life, only way it could get to that is if the world was to get hit by an asteroid, not a depression. People will survive a depression as they have before.
Posted by: Hoody | September 09, 2009 at 08:11 PM
====================================================================
On another thought how would you pay those monthly bills anyway with solid gold? Is the phone, elect, and cable co gona send around an armored truck? and when they do are you gona have a small scale to measure out the exact amount of gold it takes for that bill at that time ( going rate) lol yeah right. Besides if the Gov decided, it could just confiscate it again and make it illegal to own like before, that would frost all the gold freaks rof.
It didn’t post, so here we go again!
This is what I posted on another blog before I ran into this.
There ain’t nuff gold around for “everybody” even those that can afford to buy it or have money to buy it with, besides I’m not sure just why would anybody “with” gold want to take your paper dollars for it if its worth soooo much more?
So if “everybody” with enough money decides to go and buy the actual metal, it won’t go far, the major governments will own it all anyway, and it will be so high that even the millionaires won’t be able to afford it. So what do you gold freaks think will happen than? And if you have those silly “paper” gold certificates, who would want to trust another piece of “paper” that says its “backed by the full faith” lol
I got a news flash, we the lowly middle class, the ones that have street smarts and military training, will be here to help you out with its storage lol, besides you can’t eat gold or any other metals, it will be the lowly field hand and farmers that will rule if this thing you fear comes to pass. But I don’t think it will get that bad, at least not in this life, only way it could get to that is if the world was to get hit by an asteroid, not a depression. People will survive a depression as they have before.
Posted by: Hoody | September 09, 2009 at 08:11 PM
On another thought how would you pay those monthly bills anyway with solid gold? Is the phone, elect, and cable co gona send around an armored truck? and when they do are you gona have a small scale to measure out the exact amount of gold it takes for that bill at that time ( going rate) lol yeah right. Besides if the Gov decided, it could just confiscate it again and make it illegal to own like before, that would frost all the gold freaks rof.
[...] Read this article: What if Everyone in the World Wanted a One-Ounce Gold Coin? [...]
Excellent post, James the Wanderer. We don’t have a James in the Ring…
[...] level, with major dealers paying …Full Article: American Eagle $1 Stuns – Coin ValuesTagged What if Everyone in the World Wanted a One-Ounce Gold Coin? – whiskeyandgunpowder.com 09/28/2009 If we’re right about where the price of gold is headed, the [...]
[...] Excerpt from: What if Everyone in the World Wanted a One-Ounce Gold Coin? [...]
[...] Original post: What if Everyone in the World Wanted a One-Ounce Gold Coin? [...]
1 in 55 people is 1.8%, not .018%
Dear Hoody: You’ve got good instincts, but you need some more facts and organization. That isn’t a criticism, just telling you that a few more tools would make your analysis easier. My e-mail address isn’t hard to find if you want to discuss this with someone who will answer. LBT
I agree that most of the consequences of the Fed’s actions have yet to occur. While things may seem bad now because we are in a recession, they can get a lot worse given the potential for a currency crisis due to the Fed’s money printing. Over the weekend I read some very good articles at http://www.goldalert.com that discuss the history of monetary policy in the US, the Federal Reserve and broader government’s role in the economic problems, and the relationship between the value of the dollar and the gold price over time. The articles also discuss potential investment implications for the gold price, gold mining companies, and fiat currencies in general.
I agree that most of the consequences of the Fed’s actions have yet to occur. While things may seem bad now because we are in a recession, they can get a lot worse given the potential for a currency crisis due to the Fed’s money printing. Over the weekend I read some very good articles at <a href=”http://www.goldalert.com/” rel=”nofollow”>http://www.goldalert.com</a> that discuss the history of monetary policy in the US, the Federal Reserve and broader government’s role in the economic problems, and the relationship between the value of the dollar and the gold price over time. The articles also discuss potential investment implications for the gold price, gold mining companies, and fiat currencies in general.
Thanks for the information, we will add this story to our blog, as we have a audience in the gold sectors that loves reading like this. Thanking you. gold coins
I actually find myself agreeing with hoody to an extent. If we get a worldwide economic collapse to the point major governments fail and chaos reigns you are going to want, cans of beans, bags of rice, and a place to hide. lol
But if you think the U.S. can stay intact and expect inflation down the road some gold in your portfolio is more than a reasonable idea.