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Based on the current gold spot price of $2,636.35
Gold is a strange metal in many ways. It’s been valued for thousands of years but for most of that time – until the development of electronics in the last few decades – it’s had few practical uses. Softer than iron, heavier than copper, it didn’t really have a role to play in technological progress. Its importance has always been based on its appearance and, especially, its rarity.
Gold is one of the few metals that can be found in its pure state, and while that made it easy for early civilizations to gather it also showed exactly how rare it is. Compared to iron or aluminum – both important industrial metals, but also among the most common elements on Earth – there isn’t very much of it, and that means it has always been highly valued. Of course the supply has increased as more is mined but demand has gone up even faster, so over time the price of gold has steadily risen. That’s good news if you own a supply of it; gold is one of the few commodities that more or less guarantees you a good return.
It’s the fact that the supply is limited. Advances in technology increased production dramatically at the end of the 19th century, and more modern innovations make it possible to extract gold that wouldn’t have been economical before, but there’s only a certain amount of it in the Earth’s crust and once that’s all been mined there isn’t any more. That’s the key fact that lies behind gold’s value as a commodity.
Experts estimate that 75% of all the gold that has ever been mined has been extracted since 1910. That means it’s possible to work out the total supply quite accurately – good records have been kept about modern gold production. The total amount mined throughout human history is around 191,900 US tons, or 5.6 billion Troy ounces. That sounds like a lot, but in fact if you put it all together in a single cube it would measure less than 69 feet on each side. It would fit comfortably under the Eiffel Tower in Paris.
Every year about 2,500 tons of gold is mined and added to the world supply. What happens to it? About half of it is used to make jewelry (and half of that goes to India.) 40 percent is turned into coins and bullion that are bought as investments, and the last 10 percent is used in industry. Most industrial uses for gold are related to electronics. It’s highly conductive and doesn’t tarnish, so it’s an ideal material for contacts and high quality circuitry. It can also be used to shield delicate instruments from electromagnetic radiation, so it’s essential for spacecraft and some types of airplanes. Because it’s so durable gold can be used over and over again, though – there’s a growing industry that recovers gold from old computers and cellphones, and from there it can be used for other purposes. The gold in your coins might be freshly mined, but it might also have a long and interesting history behind it. In terms of cash value it doesn’t matter; gold is gold. Jewelry will have an additional value based on the work that’s gone into it and perhaps on its history but the value of the metal itself is based purely on weight. That’s how gold prices are quoted on the commodity markets – as a price per ounce.
No matter how large or small your own supply of gold is, as long as you know how much it weighs you can calculate how much it’s worth. If you enjoy playing with big numbers you can even work out how much all the gold in the world is worth using exactly the same technique. Of course the gold price is changing constantly, so it can be hard to keep up to date. Don’t worry though – we’ve developed a handy calculator that will do it for you. We use automated tools to keep track of the latest gold prices, and we’ve adapted them to keep a running total of what all the gold in the world is worth:
Based on the current gold spot price of $2,636.35
It’s a pretty spectacular amount of money by any standard. Even if your own gold investments are on a more modest scale you can feel some satisfaction at being part of it.
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