Gold vs the world

With the latest run up in the price of gold measured in dollars, the total value of existing gold has reached $30Tn. It’s an incredible figure, particularly when we understand it has doubled in less than 2 years. But it makes sense to put in context with other global figures, such as total Equity market cap, global debt and leverage. The global equity market cap is estimated at $145Tn, almost 5X th total value of gold. The total value of the global debt is $340Tn (11X), which means if we were to consider gold as the only money (which in fact it is) global debt and equity are supported by just 6% of their value in gold. Leverage (which somehow is embedded in the prior calculations), including margin, leveraged ETF/ETP and options, roughly account for $11.5Tn, or a third of the gold market cap. If we were to add silver to the mix to support the system, we will be adding “just” $3Tn, not even 1% of the total Debt+Equity. The financial world has ballooned in terms of fiat money, and gold (and likely silver) is playing catch up. For our crypto readers, Bitcoin and Ethereum add $2.5Tn to the mix, even though it is still questionable whether crypto works as a storehold of wealth, and therefore money. Paraphrasing the line on the movie Jaws, “where going to need a bigger boat”.

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