Not sure, I would guess most it in last 50 years due to improvements in machinery etc.
Spending All the Gold in the World
(February 5, 2007) President Bush presented to Congress today his proposed budget of $2.9 trillion. Democrats, of course, objected to some of the proposed entitlement cuts, while realists pointed out that some of the budget’s assumptions are, well, unrealistic. But we have another take altogether….
Big numbers are a particular fascination of ours, and nothing says ‘big’ like the modern federal budget. It seems that for politicians, there is simply no limit to spending on any number of seemingly worthwhile endeavors, particularly today, when borrowing against our nation’s future is so easy to do.
So President Bush’s $2.9 trillion budget was really no surprise to anyone. But take a look at it this way:
The United States government will spend, in one year’s time, a sum equivalent to the current value of all the gold in the world. That is, all the gold that has been discovered and mined on every continent, every single nugget and grain, since the dawn of mankind – the equivalent in dollar value of all that gold is our annual federal budget.
Let’s do the numbers.
First off, how much gold is there in the world? The Gold Institute estimates 118,000 tonnes (a tonne is 1,000 kilograms), while the World Gold Council calls it 145,000 tonnes. Of course, no one knows for certain, as gold exists in government, bank, and private bullion holdings, jewelry, coins of all types, and, being the private metal that it is, quite a bit of gold is squirreled away out of reach of any official accounting.
For the sake of argument, let’s call it 138,000 tonnes, a number comfortably within those two official estimates.
A kilogram of gold is 32.15 troy ounces, so at $650 spot, a kilogram is worth $20,897.50. A tonne is 1,000 kilos, which makes each tonne worth $20,897,500.
Take that figure and multiply by our estimate of total world gold supply at 138,000 tonnes, and we arrive at $2,925,650,000,000. Round it off to $2.9 trillion, and you come up with the same sum that the U.S. government proposes to spend in a span of 52 weeks.
Pretty impressive, eh? All the gold treasure in the world, spent in a year. A $2.9 trillion budget is really an astounding miracle of government profligacy writ large.
But the more practical lesson we can take away from contemplating these enormous numbers is how cheap gold is today. When one nation can spend, in a year, a sum equal to all the gold in the world priced in that same nation’s currency, we are witnessing something truly unprecedented in monetary history.
Either gold is an obsolete relic, or the biggest bargain available at U.S. dollar prices today.
Which do you think is true?
-Richard Smith
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