
How much gold is there in the world? - JacobAldridge
http://www.bbc.co.uk/news/magazine-21969100
======
timedoctor
The longer quote from Warren Buffett is very interesting

Today the world’s gold stock is about 170,000 metric tons. If all of this gold
were melded together, it would form a cube of about 68 feet per side. (Picture
it fitting comfortably within a baseball infield.) At $1,750 per ounce –
gold’s price as I write this – its value would be $9.6 trillion. Call this
cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all
U.S. cropland (400 million acres with output of about $200 billion annually),
plus 16 Exxon Mobils (the world’s most profitable company, one earning more
than $40 billion annually). After these purchases, we would have about $1
trillion left over for walking-around money (no sense feeling strapped after
this buying binge). Can you imagine an investor with $9.6 trillion selecting
pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current
prices make today’s annual production of gold command about $160 billion.
Buyers – whether jewelry and industrial users, frightened individuals, or
speculators – must continually absorb this additional supply to merely
maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced
staggering amounts of corn, wheat, cotton, and other crops – and will continue
to produce that valuable bounty, whatever the currency may be. Exxon Mobil
will probably have delivered trillions of dollars in dividends to its owners
and will also hold assets worth many more trillions (and, remember, you get 16
Exxons). The 170,000 tons of gold will be unchanged in size and still
incapable of producing anything.

You can fondle the cube, but it will not respond.

~~~
IgorPartola
I don't get it. Warren Buffet seems to be wrong, which is somewhat unlikely.

First, there is only one "world's most profitable" Exxon Mobil. You can't buy
16 of them. Second, oil will run out. Sure offshore drilling will extend how
long we can produce it for, even one Exxon Mobil producing at this rate
doesn't look like it will last much longer than a century [1]. It is likely
that the price of oil will go _up_ (I think orders of magnitude) as the
reserves dry up, but not enough to keep producing $40 billion/year. As one of
my professors in college said "Your children will not believe you burnt this
stuff" as it is so useful in other ways.

Second, oil is not end-all be-all. Cold fusion [2] is coming, and it will make
energy cost a rounding error as compared to today's cost. It is not clear when
there is a good chance it will happen within the next 100 years. This will
mark a singularity past which even the investment genius of Warren Buffet is
unlikely to see.

Because of point #2, crop fields _may_ lose their value. Why bother growing
things under the sun, when we could grow them using an artificial energy
source much closer to us, that we control? If all of a sudden, every household
has a self-regulated food growing companion cube, powered by dirt cheap
energy, why bother with corn fields?

I suppose his larger point is that you are better off investing your money in
companies that produce value in the world vs holding onto value. I would agree
with that. However, for the love of god, don't buy 16 Exxon Mobils! If you
have that kind of money, talk to me instead. I have a very profitable bridge
to sell you!

[1] <http://en.wikipedia.org/wiki/Oil_reserves>

[2] <https://en.wikipedia.org/wiki/Fusion_power>

~~~
kintamanimatt
How is cold fusion related to a technology singularity?

~~~
IgorPartola
How will basically free energy affect your day to day life?

------
victorology
Most interesting point is that gold is being "consumed" for the first time.

~~~
InclinedPlane
Wouldn't burying gold in funeral ceremonies classify as consuming as well?

~~~
tragomaskhalos
One would hope that this is true in Tutankhamun's case; although we cannot
compute how many other priceless archaeological treasures have been melted
down for their precious metal content.

------
fest
It would be nice to see if there is not more gold "sold" to investors than
there actually is.

~~~
nostromo
If that were the case, we could just declare that gold has been taken off of
the gold standard.

~~~
phyalow
Repo's, gold certificates etc. Good luck getting "your" physical allocation if
everyone tried to take delivery of "there" of the underlying assets all at
once.

~~~
daniel-cussen
This is the original form of a bank run: everybody wants to cash the
goldsmiths oversold certificates at the same time.

------
DanBC
I watched a depressing documentary[1] about gold recovery in India.

People in a jewellery district would sweep the floor to recover the gold dust.
Sometimes gold gets into the drains, so one guy takes a bucket and crawls into
the drains to gather sludge, which he then tries to sell to other reclaimers.
It's filthy, dangerous, work for little money.

Chemicals used are harsh and there's not much protection.

And then there are the people recovering electronic components from discarded
computers. Cables are gathered in bundles and burned to get rid of the
insulation. Burning plastics (on open fires, in the open air, with no worker
protections) are nasty. Lack of education and equipment and skills mean the
worthwhile bits are not recovered (from PCBs - no copper, gold, lead, etc) and
any safety equipment is sold for cash. One of the episodes in [2] is
particularly sad. A small boy smashes electrolytic capacitors off a PCB with a
rock to try to sell to someone else. It's preferable that young children don't
work (UN rights of the child, etc) but if they must work at least give them
something that's not utterly pointless.

Corruption is rife.[3]

And children[4] feel the need to work because they are poor. They're poor
because they get paid a tiny amount of money for the work they do. (Don't
fucking start with the 'cost of living' bollocks that always crops up on HN.
$1.5 per day is a tiny amount of money no matter where you are.)

[1] (<http://www.bbc.co.uk/programmes/b01n8278>)

[2] (<http://www.imdb.com/title/tt1984404/>)

[3
([http://www.theatlantic.com/international/print/2012/03/the-w...](http://www.theatlantic.com/international/print/2012/03/the-
warlord-and-the-basketball-star-a-story-of-congos-corrupt-gold-trade/253813/))

[4] ([http://www.irinnews.org/Report/94822/KENYA-Gold-mining-
beats...](http://www.irinnews.org/Report/94822/KENYA-Gold-mining-beats-school-
any-day))

~~~
gutnor
The worst thing is that what you describe is a profitable business, even in
London. Every jeweller shop gather floor swipes, drain sludge, ... and have
them processed (edit: processing is done in the UK, that's normal job for a
refiner). The recovery is in the thousands of pounds a month for a small shop.
There is an amateur community in the US and UK that recycles gold from all
sorts of electronic part for fun and profit.

You do not have to have miserable work condition to make a profit recycling
gold. The sad thing is how little valuable is human life in India.

Another example, they flatten silver into gilding leaf by hand, with a hammer.
They frequently break bones and become disabled (and out of work of course).
Gilding leaf, especially silver, is cheap (like round wire, flat sheets), as
you may imagine the machine that do that in Europe are extremely low tech,
reliable and cheap. Yet, in India, it is even cheaper to use human labor to do
that. Depressing.

~~~
lifeisstillgood
Is the machine faster and more productive?

Then the issue is of upfront capital investment surely? No sane silversmith
shop will hire 20 workers who need attention, break bones etc when 5 can
operate a machine _if the shop can ge the machine for free_

(Of course firing all those workers now you have them may be harder)

It's unlikely to be true that indian business owners sit around saying "I
would buy capital machinery, but it's sooo much more fun being evil and anyway
human life is worthless round here. Unlike London where my cousin lives and I
visited last week"

Yeah off on a strange rant there - basically saying "oh the Indian culture
does not value human life so they don't bother buying machinery we Europeans
have is flyin real close to racism - or wilful blindness. Have faith in
rational actors and economics - there is always a rational explanation

~~~
gutnor
The way it works is the following: workers pile outside the refiner and buy a
lump of silver. They spend the day hammering away. Once it is flat, they sell
it back to the refiner for a profit or use it to do stuff (dies, ...)

Unfortunately, there is no need for evil motivation, culture or racism. Good
old economic and rational actors: humans to do the labour are just cheap and
plentiful. I have no doubt that the very day it makes economic sense to use a
machine, they will use machines. The reason we use machine in London is also
simple: silvering leaf are 1GBP/g and silver grain is 0.6GBP/g. You would need
to do hammer 300 sheet of silver per hour to earn minimum wage.

------
justatdotin
I hate gold. It is a relatively useless metal that comes at great
environmental cost, with an over-inflated value driven by war and insecurity.

~~~
vacri
By 'relatively useless' do you mean 'historically useful because it was a way
to store tokens of wealth in a way that didn't decay/corrode'? And as
mentioned already, there's plenty of uses for it in the modern world.

------
ck2
What happens if they come up with a way to make gold in 100 years?

Or a way to find/mine it far more easily before then?

Since they came up with a way to make perfect diamonds and their value still
hasn't gone down, makes you wonder.

~~~
sambeau
I suspect gold will prove a lot harder to manufacture than diamonds.

Gold is created in the explosion of a large supernova that was formed from the
remnants of generations of supernova before, each explosion creating heavier
and sometimes totally different elements.

All the Silver in the world was formed in a different chain of supernovae to
the one that formed all the Gold in the world.

(A fact that blows my mind when I think too hard about it.)

<http://www.world-science.net/othernews/120906_silver.htm>

Diamonds need carbon and a fast-moving object to strike it. They are therefore
relatively common and relatively easy to make. There is one meteor crater in
Russia that contains 3000 years-worth of diamonds (at current consumption
rates). It is considered uneconomical to mine for them.

~~~
nostromo
You can create gold from mercury, but it costs more than it's worth and ends
up being radioactive.

[http://en.wikipedia.org/wiki/Synthesis_of_precious_metals#Go...](http://en.wikipedia.org/wiki/Synthesis_of_precious_metals#Gold)

------
ommunist
I believe the asteroid belt is heavily undermined. With the Soviet 'Energia'
rocket system it was within reach.

------
digitalengineer
Why is gold on the frontpage of HN? Not because of the strenght of gold
itself, but because of _the weakness_ of the other actors in this global
tragedy; the currencies and the political class governing them. Aks the people
of Ireland, Spain, Italy, Greece, Cyprus, Hungary, Vietnam, Iran, Argentina,
etc about their faith in their currency and their leaders...

~~~
rmc
Irish person here. There is no distrust in the currency or banking system. No
one's doing a run on the banks here.

Ireland was a traditional 19th century bubble

~~~
digitalengineer
Ireland was also a traditional 2007 housing bubble ;-) The way the Cyprus debt
was taken care of makes smart people of other indebted country's think twice
about _their savings_.

Yahoo News: _Big depositors at Cyprus' largest bank may be forced to accept
losses of up to 60 percent, far more than initially estimated under the
European rescue package to save the country from bankruptcy, officials said
Saturday.

Deposits of more than 100,000 euros ($128,000) at the Bank of Cyprus will lose
37.5 percent in money that will be converted into bank shares, according to a
central bank statement. In a second raid on these accounts, depositors also
could lose up to 22.5 percent more, depending on what experts determine is
needed to prop up the bank's reserves. The experts will have 90 days to figure
that out.

The remaining 40 percent of big deposits at the Bank of Cyprus will be
"temporarily frozen for liquidity reasons," but continue to accrue existing
levels of interest plus another 10 percent, the central bank said._
[http://news.yahoo.com/bank-cyprus-big-savers-
lose-60-percent...](http://news.yahoo.com/bank-cyprus-big-savers-
lose-60-percent-135608668--finance.html)

Le Monde: Anything is possible now _how much confidence is it possible to have
in the single currency and the sacrosanct guarantee of bank deposits when
customers of a European bank can wake up to find that part of their savings
has disappeared overnight?_ <http://mondediplo.com/2013/04/01nicosia>

I'd say (the loss of) confidence is one of the main reasons there is so much
talk about gold.

~~~
rmc
_Ireland was also a traditional 2007 housing bubble ;-)_

Sure, it was a housing bubble that popped around then. My point was that it
wasn't fancy financial instruments or arcane hidden scams that broke it, it
was an old fashioned "This thing (property) can only go up in value! Invest in
it now, keep making more of those things (houses), invest now and you'll be
able to flip your asset later for a higher price! It can't go down in value!"
type bubble.

If everything was on bitcoin, you still could have had the irish property
bubble happen, just like how there was bubbles like that when the currencies
were gold based.

~~~
digitalengineer
I have to respectfully disagree, _…the expansion of money through debt is
unsustainable and necessarily fuels and creates economic bubbles. This
concentrates wealth in the hands of private banks as the populace is forced
into debt simply to own a home and educate their children, hoping that the
loans can be repaid by others going into debt in greater amounts later to
purchase the assets they themselves have purchased through incurring large
amounts of personal debt. However, debt expansion leads to price appreciation
of assets through speculation as the financial market becomes riskier and this
process is unsustainable in the long run, with the last cycle of indebted
being wiped out when they cannot find anyone to buy the assets they themselves
have purchased by going into massive debt._

[http://wiki.mises.org/wiki/Criticism_of_fractional_reserve_b...](http://wiki.mises.org/wiki/Criticism_of_fractional_reserve_banking)

