Can a Little Gold Go A Long Way? A Look at Global Circulation

Posted on March 30, 2015 @ 3:00 PM EST

Face it: You’re curious about how much gold is in circulation today!Finite resources are often a topic that show up in the news or in heavy discussions. People are interested in discussing how much we’ve used of our allotted supply of things before we run out. It’s often an important discussion to have. Sometimes it’s a light conversation, like “Is there any pizza left? Can I grab another slice?” or “Do we have enough fun money in the budget for us to go see that new superhero movie?” Often times, though, it’s far more serious – some of the things that humanity must carefully watch the reserves of is silver, helium, or even fresh drinking water. Clearly, the amount of a product in circulation affects its value, and so it is an important topic to people, and even more so to investors. When it comes to the gold market, you might be wondering exactly how much gold is in circulation. After all, any investor is aware of the basic principle of supply and demand. In order to be able to track demand and prices, you have to know what the supply looks like. The answer may surprise you. Read on to find out just how much gold is in circulation, the reasons why, and how that affects factors like how much cash for gold Canadians can obtain.

A Brief History of Gold

So, when you think about how much gold is in circulation, you probably want to think about when humans started drawing it forth from the Earth. There is no one singular discovery of the metal; instead, as civilizations began to settle down and begin to mine, they all independently came to the realization that this stuff was valuable. Take a moment to think about how crazy that is: it’s impossible to find something that everyone agrees on, and yet, gold seems to be universally regarded as valuable across cultures, geographic boundaries, and sets of values. Gold is the first metal that was widely worked with and known to our species; while other metals may have led to more technological advancements or broke new boundaries, gold came first. This is largely because it’s so easy to work with, due to its soft and malleable nature, and it neither corrodes nor tarnishes. For thousands of years, we’ve been drawing gold from the Earth, and we started using it as a currency for trade at around 700 BC. So, the gold market has existed for a very long time – just not always in a form we’re familiar with.

How Much of it Exists in Circulation Today?

With such a strong history behind gold, it stands to reason that we must be drowning in the stuff, right? (Funnily enough, the Greeks thought that gold was like water, as it was often found in streams.) Well, not quite. There’s 20.7 cubic meters of gold in existence in today’s gold market. If all of the gold were to be gathered up and put into that cube, it would sell for $8.7 trillion dollars.Credit to WaitButWhy.com for the infographic and visual reference

So How Much Gold is That, Exactly?

It certainly sounds like a handsome chunk of gold – but it’s actually less than you think. To give you a comparison, one of the pyramids is 139 meters tall. All of the gold in circulation is just a mere fraction of the size. That means that there’s a comparatively small market for gold – but the demand is, of course, very high. This helps explain the high cost of gold – there will never be quite enough to meet demand.

Why Isn’t the Global Supply of Gold Higher?

With thousands of years of history, you would expect that we’ve accumulated a far greater supply of gold than just that one little cube. Well, it’s a little more complicated than that. Here are some of the reasons that the global supply of gold is so low:

All That Glitters is Not Gold

 It may be gorgeous, but that doesn’t necessarily mean that it’s gold.If you take a look at some of the gold available, your keen eye may notice it doesn’t quite have the same lustre or sheen. That’s because, well, not everything that looks like the precious metal has the same value. People are eager to get the “look” of gold without paying the price, and so costume jewelry can play tricks on your eyes.

Wear and Tear

Gold doesn’t tarnish or erode like other metals, but it is very soft. If it’s badly treated or neglected, it can potentially lose its value. This is why cash for gold deals should be handled while gold is still in good condition; not when it’s on its last legs.

A Little Gold Goes a Long Way

Gold is a metal that is often reinforced and strengthened with other metals; as previously mentioned, it’s very soft and can wear away and decay on its own. By strengthening it with a stronger metal, this is avoided, and the gold simply stretches farther.

At EDI Refining, we keep a close eye on the gold market – after all, we know how important an expert look at the price of gold is for our customers. If you’re looking for an insight as to the current state of the precious metals market, visit our blog for more information, discussion, and updates. We cover all of the bases and help explain how you can benefit.