Historic global ‘aboveground’ gold stock overestimated –report

A key estimate of global “aboveground” gold overestimates the stock by 16,032 tonnes, equating to $900bn worth of the precious metal at current prices, according to a report from an industry not-for-profit foundation.

The GoldMoney Foundation is part of Goldmoney, a leading provider of gold, silver, platinum and palladium to retail and corporate investors. The Foundation’s report asserts that the Thomson Reuters GFMS official figure for the world’s total supply of aboveground gold overestimates the stock.

James Turk, founder and chairman of GoldMoney, charges that as well as overestimating total gold production pre-1492, there is overreliance by the World Gold Council on uncorroborated data provided by Thomson Reuters GFMS, the precious metals consultancy.

He also says insufficient attention has been paid to the views of other expert parties (including United States’ Federal Reserve analysts Velde and Webber) who have indicted lower levels of total aboveground gold.

According to the World Gold Council, which supports data provided by Thomson Reuters GFMS, as of December 2011 there were 171,300 tonnes of gold stock aboveground. Turk’s investigation and analysis of other third party data concludes that the true total is just 155,268 tonnes.

“Because of this in-depth study we now have a figure for the total quantity of the aboveground gold stock that is logically derived and supported by detailed analysis,” said Turk. “Further, by using conventional economic principles, this study also explains why gold has a consistent purchasing power over long periods of time, which is one of gold’s most valuable attributes.”

John Embry, chief investment strategist at Sprott Asset Management said the study combined “rigorous research with impeccable reason to arrive at a conclusion that I find far more defensible than that of the Thomson Reuters GFMS study”.

“In particular, the analysis of the pre-1492 data equates to a much more logical gold stock figure. This is important because that is where the greatest discrepancy occurs in the Thomson Reuters GFMS report.” 1492 is the historical date from which gold production is usually measured.

The GoldMoney Foundation is a not-for-profit educational organisation established in 2010 by GoldMoney, which safeguards over $2.2bn of retail and institutional customer assets. Via the company’s online platform, customers can buy, store and sell precious metals easily and securely. The aim of the Goldmoney Foundation is to promote and support educational initiatives that expound the principles of sound money.

The full GoldMoney Foundation report can be found at: http://www.goldmoney.com/goldmoney-foundation/essays.html

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