In the same category

How Much Gold Stock is There Really?

IMG Auteur
From the Archives : Originally published March 18th, 2013
4650 words - Reading time : 11 - 18 minutes
( 1 vote, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Gold University

24hGold - How Much Gold Stock ...

 

 

Prologue

This was added after the article below was first published. I was accused by a few of being speculative, though I had admitted as such throughout the article. It is possibly best to explain the thought process behind the article…

It goes without saying that the best method for establishing a valid story is the sequential structuring of events – facts – one after the other. A diligent enough assembly of facts will begin to tell its own story without any need for the author to interrupt. In almost all subject areas this is not only desirable, but possible. With reference to the subject of the amount of gold in the world, the known facts are sparse and separated by centuries and sometimes millennia. Author interruption – otherwise known as speculation – becomes wholly necessary, though regrettable. Whilst the speculation cannot uncover with any precision the maximum amount of gold in the world, the facts, threadbare though they are, indicate with a certainty that the previously accepted figure for the total amount of gold in the world under-represents the facts to a remarkable degree. PB


The current estimate for the amount of gold stock in the world is in the region of 170,000 tonnes. As the very first step, it needs to be acknowledged that an estimate is all that is available. Running a worldwide survey on how much gold people own is rather pointless. Even in good times, people are noticeably reluctant to discuss their true wealth. In troubled times, such as now, that becomes an unwillingness to even be interviewed. Nevertheless, it also needs to be emphatically stated that 170,000 tonnes is far too low an estimate and that it is time for a revision. Every single media outlet repeats this same figure, or similar, as though it is gospel.

Included in this 170,000 tonnes is the 10,000 tonnes estimated as being the total amount of gold mined in the history of the world prior to the Californian gold rush of 1848. This was simply a guess.

‘David Guyatt, in his article “The Spoils of War”, commented that prior to the Californian Gold Rush of 1848 the amount of gold believed to be in existence was about 10,000 tonnes, i.e. it was “the sum total of gold mined throughout the world during the preceding 5,850 years, for which mining records exist.” In correspondence with the World Gold Council in 1998, Guyatt says that the WGC admitted that this figure was just an “industry estimate”, although as he says: “Nevertheless, this estimate has been incorporated into current day official mining figures and punched out as actual fact.”’
The Thunder Road Report

The “industry estimate” of the amount of gold mined in that 5,850 years works out to be 1.7 tonnes a year. The assumption that underpins the idea that not much gold was mined prior to the Californian gold rush is essentially, that if it takes modern methods a whole year to extract 2,400 tonnes then it would take far, far longer for more primitive cultures to extract the same amount of gold.

The huge, gaping flaw in the modern versus primitive technology theory is that it assumes that all else was equal. It unequivocally was not. The further back into history we travel, the more accessible and plentiful gold was, just as it will be far less plentiful in the future than it is now. Our ancestors mined all the easy to access gold in the world. The Mesoamericans pulled chunks of it out of rivers with their hands it was so plentiful. Today we are mining the residual leftovers – the sparse remnants of what was once plentiful.


In 1986, Ernie Maceda the Filipino Minister for Natural Resources, revealed that the country’s gold panners produced more than 18 tonnes of gold a year. All that from the placer mining of just one country*. The usefulness of this Filipino figures is that the law at the time stipulated that all gold had to be sold to the Filipino government. Thus the miners were delivering directly to the central bank allowing for a more precise than usual estimate of gold production.

If primitive panning methods were able to produce a declared total of 18 tonnes a year in 1986, then it makes a mockery of the claim that at an earlier time, when gold was in far greater abundance, the whole world was only able to produce 1.7 tonnes a year. It goes far beyond just implausible, it speaks of an estimate made by people who were completely out of touch with the reality of gold production.

Nor should it be assumed that earlier gold extraction was as primitive as simple panning. The Ancient Egyptians used far more sophisticated mining techniques than the Filipino panners. This included fire techniques to break apart large rocks which were then crushed to dust before the residual gold was washed out. The Mesoamericans were even more sophisticated. Amongst other scientific feats, it is highly likely that they utilized the mercury amalgamation method of gold and silver extraction before the Europeans*. The ancients were not as primitive as 20th and 21st century arrogance would have us assume. To imagine them as knuckle-draggers scratching gold out of rocks with pointy sticks, and only able to glean 1.7 tonnes of gold per annum worldwide, speaks more to our lack of sophistication than theirs.

* ‘Pre-Columbian Societies Knew a Thing About Extracting Gold’ – AAAS.ORG


From a meeting with Middle East power brokers in 2011…
“’You guys don’t show up on my radar screen here. I have a feeling there’s a lot more gold around here than anyone is willing to admit.’ They all sort of looked at each other and smiled and so without saying so in so many words, I was led to believe there was a lot more gold out there than what shows up in the official statistics…”
Jim Rickards – investment banker and US Intelligence and defence insider.

When the tomb of Tutankhamen was opened in 1922 it contained staggering amounts of gold. The coffin was over six foot long and made from solid gold an eighth to a quarter of an inch thick. The best estimates are that the amount of gold needed to create this coffin alone would have been 1.5 tonnes.

“At first I could see nothing, the hot air escaping from the chamber causing the candle flames to flicker, but presently, as my eyes grew accustomed to the light, details of the room within emerged slowly from the mist, strange animals, statues and gold – everywhere the glint of gold. For the moment – an eternity it must have seemed to the others standing by – I was dumb with amazement, and when Lord Carnarvon, unable to stand the suspense any longer, inquired anxiously, ‘Can you see anything?’ it was all I could do to get out the words, “Yes, wonderful things.”
Howard Carter’s description upon opening Tutankhamen’s tomb – 1922

There were full sized, gold chariots in Tutankhamen’s tomb. The famous facemask weighted over 24 kilograms. All this from one of the least important pharaohs who died young and without ever leading an army.

Because of his insignificance, Tutankhamen was buried in one of the smallest and poorest of the pyramids. His only claim to fame is that his tomb was relatively intact. The 100 or so tombs of the other, far more revered pharaohs were discovered only after they had been stripped of all their gold. How much gold existed in those other tombs can only be left to the imagination.

Even if the Ancient Egyptians, with their tens of thousands of slave labourers and more advanced techniques, were so incompetent that they were only able to mine the same amount per year as the Filipino panners of 1986, they did that for 2,000 years. This most conservative of figures would have produced an amount of 36,000 tonnes of gold. Ten times that amount would be the more likely figure.

By the time Roman gold mining records began, Egypt had already mined out its country of the easily available gold. The Egyptians moved south and found enormous quantities of gold in the legendary mines of Nubia. It is reputed that there was more gold mined from Nubia than from all other sources in the known world put together prior to the California gold rush. Whilst the Nubian mines undoubtedly produced huge amounts of gold, that is unlikely. There was also the Midian mine in the far north of what is now Saudi Arabia where the Red Sea meets the Gulf of Aqaba. This area was famous for its abundance of gold.

“By 325 BC the Greeks had mined for gold from Gibraltar to Asia Minor.” (World Gold Council)

Even after the beginning of official records, only a percentage of the actual mining was recorded. Probably a majority in some countries, but by no means all countries. In many countries where gold mining took place, few records of any sort were even attempted until recent times.


“…contains rich underground veins of many kinds, including many of silver and gold…”
Diodorus Siculus, Bibliotheca Historica, 1B.C. – speaking of India

The history of Asian gold is a book all on its own. As with Egypt, by the time Roman records began, India had already mined out its country of the easily available gold. Only in the present day has mining technology advanced to the point where the residual deposits are becoming viable again.

The Indus Civilization is the oldest in existing records, beginning just after the ending of the Ice-Age. The Mehrgarh period of the Indus Civilization has been dated to at least 7,000 B.C.. The Ancient Egyptian Civilization came almost 4,000 years later. There is some evidence to suggest that coinage originated in the Indus Civilization and speculation that the idea arrived in Lydia and the Greek states from there.

Between 2000 and 2010 India imported 7,500 tonnes of gold. In just 2010 alone India imported a World Gold Council estimate of just under 1000 tonnes. In 2011, imports are again expected to be 1,000 tonnes. The Nizam of Hyderabad alone was reputed to own 15,000 tonnes. The significance of gold to the Indians has never waned. It is a major part of the fabric of the culture and far more than just a store of wealth, let alone a medium of exchange. The Hindu creator was born from the cosmic egg of gold. Brahma is known as ‘Hiranyagarbha’ – the one born of gold. Hiranya, the ancient name for gold comes from the root ‘Hri’ meaning ‘imperishable’.

“The Sun is Brahman – this is the teaching. An explanation thereof (is this). In the beginning this (world) was non-existent. It became existent. It grew. It turned into an egg. It lay for the period of a year. It burst open. Then came out of the eggshell, two parts, one of silver, the other of gold.

That which was of silver is this earth; that which was of gold is the sky. What was the outer membrane is the mountains; that which was the inner membrane is the mist with the clouds. What were the veins were the rivers. What was the fluid within is the oceans”.
Chandogya Upanishad, III, 19, 1-2

In 1997 the ‘International Center for Peace and Development’ quoted a report showing that India had 29,000 tonnes of gold in private hands. As already mentioned such reports tend to understate the real amount due to people’s natural reluctance to disclose their holdings.

“How much gold jewellery is available in North America for refiners? (I will ignore Europe and Asia, given the higher regard in which gold is held there.) An industry contact tells me the average household owns jewelry containing 0.75 ounces of gold. With 130 million households, that represents approximately 3,000 tons.”
Publius – Journal of The Gold Standard Institute Mar. 2011

In the US, there is a very low awareness of gold and the nation has a history of less than 300 years. It is reasonable to assume that in India, where gold has been widely accumulated as the only form of wealth and savings for at least 6,000 years, and where there are 1.2 billion people, there is at least 100 times this amount… 300,000 tons of gold. It cannot be stressed too much that Indians have a huge awareness of, and respect for, gold. It is owned, usually in the form of bars or jewellery, by everyone down to village peasants. The Indians, who have always revered gold to an even greater degree than the ancient Egyptians, have traded for gold from all over the world for at least 5,000 years. India has historically been spoken of as the gold and silver sponge, meaning it enters, but never leaves.


Siam is the old (and beautiful) name for Thailand. It comes from Sanskrit meaning gold. The Chinese still call Thailand ‘Jin Lin’. It means ‘peninsula of gold’.

“Gold is so plentiful that no one who did not see it could believe it”.
Marco Polo reporting on gold in Lokak (Siam or Malaya)

“in great abundance because it is found there in measureless quantities”… “so much indeed that the ruler of the island has a very large palace entirely roofed with fine gold, just as we roof our churches with lead”
Marco Polo reporting on gold in Japan

“Gold dust is found in the rivers, and gold in bigger nuggets in the lakes and mountains”.
Marco Polo reporting on gold at Karajang (Chinese province of Yunnan which is still a gold mining area today)

The vast gold treasure of the Kublai Khan in China will have been added to and handed on down from one dynasty to the next. It is reasonable to assume that Mao’s takeover would have seen this hoard increased through confiscation. It is also possible though that this treasure became a part of Yamashita’s gold…


Yamashita’s gold, which is amply documented, tells a story of vast amounts of gold. During World War 2, Japanese forces pillaged gold and platinum, along with other valuables, from every territory that they occupied. General Yamashita was charged with hiding this treasure trove. Most of the treasure was shipped directly to Japan. Toward the end of the war US submarines blockaded Japan and it became necessary to hide the gold elsewhere. The chosen location was the Philippines (and Indonesia).

In 1945 the US located some of these stashes and huge tonnages of gold were shipped back to the US. There is much evidence to suggest that Ferdinand Marcos subsequently recovered most of the remaining gold hidden in the Philippines. The following is an extract from a legal document in a case lodged in the Supreme Court of Hawaii in 1998 – ‘Roger Roxas and the Golden Buddha Corporation vs. Ferdinand E. Marcos and Imelda Marcos’. The case was won which means that the evidence was found to be credible. Roxas was awarded 43 billion US’s – later reduced to 22 billion on appeal.

Fourth paragraph:
“Curtis (Robert Curtis-owner of a mining business in Nevada) also testified that General Ver had brought him to a basement room in the Marcoses’ Miravelles summer palace, where the gold bars were kept. Curtis entered a room “about roughly 40 by 40,” stacked to the ceiling with bars of gold. He estimated the ceiling to be ten feet high. Two or three four-foot wide aisles ran through the stacks of gold. The bars were in a standard seventy-five kilogram size. He noticed that the bars had “oriental markings” on them.”

Allowing for three, four-foot wide aisles, the room contained approximately 11,200 cubic foot of gold. That is over 6,700 tonnes. All this gold came from just one site… Luzon; there were a total of 172 sites.

Official gold stock of 170,000 tonnes is best visualised as a cube with sides of 67 feet (20.4 metres), meaning that its sides are 11 foot (3.35 metres) shorter than a tennis court. That is supposed to represent the sum of all gold mined… ever. In light of just that one paragraph above it is not possible to take the ‘industry estimate’ of gold stock seriously.

Fifth paragraph:
“On cross-examination, Curtis testified that his study of the Yamashita treasure had suggested that the treasure contained eighteen buddhas and was distributed among 172 sites. He also testified that Ferdinand had told him that the gold that Curtis had seen had come from a site in the Luzon region. Moreover, in 1975, while Curtis was working with Ferdinand, another site was discovered in the town of Teresa, and more gold was retrieved.”

Further testimony from the same case both lends support to the testimony of Curtis and speaks of another gold storage room:

Eighth paragraph:
“… General Ver showed him (Olof Johsson, a clairvoyant called in to help in treasure hunting} a basement room in the guest house outside Malacanang Palace and another room in the summer palace, both filled with gold. He was also shown a golden buddha in the summer palace that was too heavy for him to move. Jonsson described the basement room in the guest cottage as being approximately twenty feet wide, forty feet long, and twelve feet high. He estimated the room in the summer palace as measuring “probably 40 feet by 25 or something” and twelve feet in height. Both rooms were filled with two-foot-long bars of gold stacked to the ceiling. Jonsson testified that it was possible that the bars were four inches wide and four inches thick, but that he could not recall exactly.”

Eleventh paragraph:
“(Michael) O’Brien (an Australian in real estate business) also traveled to the Philippines. At one point, when he expressed doubt as to the existence of so much gold, he was blindfolded and taken to a warehouse. Inside the warehouse was a stack of approximately three hundred to four hundred boxes, each the size of a six-pack of beer. O’Brien opened one and observed that it contained three crudely smelted gold bars, which he described as being pitted “like an orange peel.” He tried to lift several other boxes and found them too heavy to move.”

Two Australian bullion dealers testified under oath in the same trial that they had sold 1.63 trillion dollars worth of bullion on behalf of Marcos in the 1980′s. As the precise year was not given I have assumed a price of $500 per ounce. That equates to just over 100,000 tonnes of gold. This evidence was accepted by the court as truthful. The full range of possible tonnage based upon 1980′s prices would be from 84,000 tonnes to 169,000 tonnes.


In 1998 a Filipino newspaper called The Enquirer published an article revealing that 96 members of the Filipino military had signed a joint affidavit declaring that they had, between 1973 and 1985, recovered over 60,000 tonnes of gold from 30 out of the 172 Japanese treasure sites. If these 30 sites were typical, then the total amount of gold recovered by Marcos was just under 350,000 tonnes. Far more of the gold reached and as far as is known, remains in Japan. The quantity seized by the US from both Japan and the Philippines is unknown.


Japan, The Philippines, Indonesia, India and China hold vast tonnages of gold that western-centric estimates seem to have entirely ignored in their calculations. There are also very large hoards with non-public documentation in Europe, particularly in Austria, the Netherlands and Switzerland and quite possibly other European countries that the author is not aware of. The US holds a large amount of non-publicly documented gold which far surpasses its official holdings of around 8,000 tonnes. Note that there is no claim here that any of these hoards are known about by the relevant government authorities.


The Mesoamericans were actively mining much of Central and South America. How much gold did they mine? The ransom unsuccessfully paid by the Incans for their Emperor Atahualpa alone was sufficient to fill a whole room with the measurements of 17ft (5.2 metres) by 22ft (6.7 metres) by 8ft (2.4 metres) from wall to wall and from floor to ceiling with gold (Wikipedia). The gold figurines and plates were melted down and turned into uniform ingots on the spot. The room contained over 2,900 cubic foot of gold in ingot form. That one room alone contained over 1,500 tonnes of gold which officially represents 15% of the total of all the gold mined in the whole world for the previous 43,000 years.

That was just one amount of gold in the 300 years of pillage that was South and Central America’s fate. Mesoamerican artefacts were still being melted down in London in the 19th century.


“But if you tap into the Vatican accounts, of the Vatican bank, you come up with a claim of total bullion… the total value of the Vatican bank reserves would claim to be more than the entire value of gold ever mined in the history of the world.”
Lord James of Blackheath – speech in The House of Lords 2010

It is unlikely that the Vatican have any reason to exaggerate their gold reserves.


Rumours of a vast Java owned gold hoard, the product of a thousand years or more of trading, that dwarves the rest of the world’s gold combined have circulated for centuries, but there is no information available in the public domain to substantiate this.


Whilst much of the world’s gold is widely distributed, as in India, much of it is almost certainly in large, privately held or sovereign hoards. There is no doubt that these hoards are known about to some beyond the sphere of the actual owners.

It is possible that one of the large hoards of undisclosed gold could re-surface and be used to back one or more of the existing major paper monies. On the positive side this does allow for a measure of optimism in what is otherwise a ‘game over’ situation. If there is a solution to the current monetary meltdown, it will come as a bolt from the blue, and it will involve large amounts of previously undisclosed gold.

Why is it that the amount of gold in the world has been deliberately understated as appears to be the case? The answer most likely lies with the myth, accepted by almost everyone, that gold is valuable because of its shortage. The fear, entirely unfounded, is that if the real amount of gold in the world were publicly acknowledged then gold would be suddenly and massively reduced in value. This would then lead to convulsions in the world’s monetary systems as it is gold that underpins all concepts of money.

The ancient myth that gold’s value is due to its shortage has survived thousands of years right up to the present day. It is far from amusing though as there appears to have been a fair deal of skulduggery committed toward the end of maintaining the charade… all for naught. A minimum of 1,200,000 tonnes of gold gives a stock to flow ratio of 500 to 1. Gold is already the only possible money because of its stock to flow of 70 to 1. Increasing it to 500 to 1 would enhance gold’s monetary property, not diminish it.

It is time to put aside the myth that gold is valuable because there is not much of it. Gold is a store of stable value over time because of its high stock to flow ratio – because there is so much of compared to the flow.

Another reasonable speculation with regard to the persistence of the myth of gold’s rarity is that it obviously an advantage to those who wield power through the issuance of paper money. “There isn’t enough gold to return to the gold standard” is a common refrain from those whose self-interest it serves.

Once it becomes clear that gold will continue to hold its value, no matter how much of it enters the marketplace, then much of it could emerge from hiding. Trust in governments, which is currently plumbing new depths, is also a pre-condition to that though.

There are numerous conspiracy theories which claim that covert agencies control the world’s gold, and therefore its destiny. This is not wholly true, there is far more gold in the world than even these people know about. By no means are all the large hoards of gold owned by those of, to put it politely, questionable intent. There are those who understand, if not intellectually at least viscerally, the morality of gold and are sound custodians of that with which they are charged.


No claim to precision can be made with regard to the amount of gold in the world. All that can be done is to try to arrive at an educated approximation based on such vague evidence as is available. The evidence overwhelmingly states that 170,000 tonnes is probably around 10% of the gold that actually exists.

Somewhere between 1,200,000 tonnes and 2,500,000 tonnes would seem to be a reasonable and conservative estimate. Obviously it could go way beyond 2,500,000 tonnes. What is beyond doubt is that 170,000 tonnes barely represents the tip of the iceberg of the world’s gold stock. Let us be rid of this figure once and for all. It is a folly to keep repeating an obvious error as though it were fact.


Amendment

* A figure sent from a contact in the Philippines (see comments at the bottom – ‘Peter’) informs that this figure was probably exaggerated by gold from non-panning sources. According to Peter’s sources (he is a refiner in the Philippines), the true panning figure as of 2008 was about 6 – 7 tonnes a year. Bearing in mind the diminishing nature of production from panning, but coupled with the greater interest in 2008 than in 1986 (year of Maceda’s quote), I guess that the safest presumption is that the figure would be similar.

So, the figure of 18 tonnes a year is reduced to say 6 tonnes a year. Because I built a heck of a lot of fall-back position into this article (knowing how much flack I would receive), this does not alter the hypothesis. I used the stats from one Asian country. I can think of another 8 Asian countries, all high gold, high panning areas, where the production would be similar. If panning production in the Philippines is 6 tonnes a year, then panning just from Asia can be assumed to be a minimum of 50 tonnes a year.

Placer gold is harder and harder to find, and has been so for all the thousands of years of production. The gold that is freed from its ore source is in that situation because of the erosion of rock over hundreds of millions of years. What is being panned out is not being replaced at anywhere near a replenishment rate. That 50 tonnes a year is a much reduced rate from 6,000 years ago.

My honest interpretation of this info is that the case becomes ever stronger that the amounts of gold produced in ancient times were truly enormous, more so that I stated in the article. The importance of placer mining is that, in one variation or another, this is the one method of production that has existed since time immemorial.

Ignoring the fact that we know by the law of diminishing returns that this figure was far greater in ancient times, but just using the same figure, then its application to the two other designated gold regions (Europe and Arabia – there is not enough evidence yet of mining from the Mesoamerican region in this period) produces a figure of 150 tonnes a year. From 4,000 B.C to year dot that is a lot of gold. A very conservative, pre A.D. figure of 600,000 thousand tonnes.

.


 

<< Previous article
Rate : Average note :5 (1 vote)
>> Next article
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Is The Price of Silver About To Explode?
21:28Themis
I have yet to see Andy provide an explanation for his all-in foray into cryptos. Although that is his personal business, it does affect his credib...
Stephen Hawking In His Final Publication: ‘There is No God’
21:08S W.
I never believed in the tooth fairy either so I am left wondering if Hawking felt the same. Even if Hawking had said there is a God I would hav...
Stephen Hawking In His Final Publication: ‘There is No God’
19:14Themis
You can't possibly "know" that there is no God. I, too, did not feel His presence as a young child and was deeply cynical about Him until well int...
Is The Price of Silver About To Explode?
20 OctOzSILV
Andy Hoffman no longer works for Miles Franklins Andy Hoffman no longer supports precious metals only Crypto currencies
Stephen Hawking In His Final Publication: ‘There is No God’
18 Octgranttc1
Ever learning, and never able to come to the knowledge of the truth. 2 Tim 3:17
Is The Price of Silver About To Explode?
18 OctS W.-1
MAYBE the price of silver will explode. I am not a fortune teller! It is the same price it was 12 years ago and it exploded then. But it wi...
Stephen Hawking In His Final Publication: ‘There is No God’
18 OctS W.-1
I have known since I was 8 yrs old that there is no such thing as God. My parents used to send me off to Sunday School. One time I came home and sa...
Death Penalty for Debasing Currency: US Coinage Act of 1792
17 Octramasart
I wonder if this Act was addressed by the creation of the Federal Reserve Act of 1913? If not, I wonder if we can find some Statesmen in...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS