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From: John McCarthy	7/6/2010 7:10:30 PM
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What is the Value of Gold’s Above Ground Inventory? <SNIP> The total value of all the gold that exists in the world is roughly US $5 trillion at today’s price and, in terms of physical size, represents a cube measuring 66.5 feet. That’s not that much from either perspective. What is the Value of the World’s Annual Gold Production? The world’s annual gold production totals US $73 billion (silver is only US $10.3 billion) at today’s price. Compare that number to the projected United States budgetary deficit for fiscal year 2010 of US $1.6 trillion, the official U.S. accumulated debt of US $13 trillion and unfunded contingent future liabilities and obligations of well over US $100 trillion. One realizes just how infinitesimal annual gold production is. In addition, in spite of a 400% rise in the price of gold over the past ten years, annual production has not been growing. This has prompted some analysts to conclude that ‘peak gold’ is now a reality, much like the scarcity of new oil supply. Phantom Gold? The LME (London Metals Exchange) based in the UK and COMEX (Commodities Exchange) based in New York are the two principal markets for trading gold bullion futures contracts. Frequently the huge volume of trades which take place in these marketplaces are cited as evidence that there is plenty of metal available to easily satisfy all central bank, industrial and investor demand. But is that really the case? How large is the bullion market compared to production? Annual global gold production amounts to about 2,200 metric tonnes which is about the volume traded daily on the (LME) London Metals Exchange. Associated bullion bank depository warehouse vaults are seemingly as opaque in their reports as are bullion ETF’s. Use of a variety of vague terms to describe the status of holdings such as ‘Registered’ and ‘Eligible’ are part of the problem. Central banks are similarly guilty of obfuscation by using terms such as ‘Bullion Reserve’, ‘Custodial Bullion Reserve’ and ‘Deep Storage’ gold. Nor is there any clarity in terms of how much is leased and from where? commodityonline.com CRACKER

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