Some Surprising Gold History

While this might sound a bit off the wall, since I turned bullish on gold bullion three years ago, I’ve often wondered just how high gold prices could potentially go. And I’ve often been asked if gold could surpass its previous high of US$800 per ounce.

I’ve heard and read different estimates, but the consensus is that about four billion ounces of gold have been mined during the course of history. At the current price of gold bullion, that equates to about $2 trillion.

The current value of all gold stocks listed on world stock exchanges is about $350 billion. Central banks around the globe hold about one million ounces of gold bullion in their reserves.

Now consider this:

— The current value of all gold ever mined by man is equal to only 5% to 7% of all the personal, corporate, and government debt outstanding in the United States today.

— The current value of all the gold stocks in the world, combined, is just 20% more than the value of Microsoft.

— The dollar value of gold bullion in the central banks of the world is equal to slightly more than the value of GE stock.

I’m not going to make any wild estimates on how high gold prices will go. And while gold prices are overbought right now and due for a correction, if investors turn their focus to gold as a true store of wealth, today’s price of US$450 per ounce will be looked upon as a real bargain.

Once foreigners give up on the American dollar, because they just keep seeing it go down in value against their own currencies, what alternatives will they have? The euro? I don’t think so. I’m thinking of something you just can’t print more of when you need it, something in low supply, something that has been the real store of wealth in history for about 5,000 years, something yellow.