WHO OWNS GOLD PART II

 

There are currently about 22 trillion dollars of gold above ground.  This number includes all the gold ever mined in the world.

15-16 Trillion of that dollar amount is in the vaults of Global Central Banks.  That's 2/3 of all available gold that is being hoarded by the governments of the world, and that ratio is growing rapidly.

If you go back about 25 years that value of all the gold in the world was closer to 2 trillion dollars and, of that, governments owned closer to 1/3, and many, such as the Bank of England, were selling gold into this abyss.  Gold was deemed a "Barbarous Relic" or a "Pet Rock" and financialization, (which is not possible when conrstrained by gold-money)  was being lionized as the savior of the global economy and an ineluctable future that would go on forever.  "Deficits don't matter, Ronald Reagan proved that" said Vice President Dick Cheney. While Art Laffer "proved" by drawing a squiggle on a cocktail napkin that the more you cut rich people's taxes the more tax receipts you would get.  In other words, the more debt you accumulate, the less debt you have.  Seriously.  Many politicians still argue that today.  

Today, the world is drowning in debt.   In fact, 8 of every 10 financial transactions in the world involve some form of Debt Refinancing.  (Stat courtesy of the brilliant Michael Howell.)

In the US, the current regime is running debt at a trillion dollars per quarter and they are financing that at the very short end of the yeild curve which is tantamount to Debt Monetization (Again, see Michael Howell for a explanation.)

In the face of this, Real Wealth is determined by Gold Ownership as it is the only asset used by World Governments as the ultimate settlement currency for commodity transactions.  (The dollar is a transactional currency but the dollars are then converted to gold - as per Nassim Taleb)

So who owns all this gold?

China and Russia currently hold about 20 percent of the world's reserve gold (officially), and they own about 25 percent of the world's mining capacity.  But most analysts put this number much higher because their gold mining sector is government run and most of that production goes straight into their Central Bank vaults.

But add in Ghana, Indonesia, Kazakstan, Uzbekistan and Indoneia (shithole countries as far as the US is concerned) which are all under China's sphere of influence, and you reach about 40 percent of the world's gold mining capacity.

The US has about 5 percent of the world's gold mining capacity.  Our one-time ally, but current enemy, Canada, has another 6 percent.

So that doesn't leave as much gold for the US consumer.  Not that the US consumer cares.  

Right now.

Right now the US consumer is obssessed with the 500 trillion dollars of financialized instruments Stock, Debt, Private Equity that comprises most of the US portfolio.  Some analysts argue that the curent inflow into gold ETF's show a renewed intereste by the US consumer, but that inflow is very much the result of Sovereign Wealth funds moving into gold (See the recent Saudi purchaes) and not the US consumer.

Our major competitors, China/Russia and their sphere of influence, are actively encouraging their consumer base to stock up on gold.  Just as the Central banks of those countries are stocking up on gold.

That's wher we stand.

If you're one of the very few US consumers who see the value of gold or hard assets in general, you can look forward to some of that 500 trillion flowing into a space with current 7 trillion dollar capacity (gold) or 15 trillion dollar capacity (precious metals and collectibles) over the next decade or two.