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New estimate of world gold stocks by James Turk of GoldMoney Foundation

Monday, October 15, 2012 14:40
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An exhaustive study of global physical gold stocks, authored by James Turk with the assistance of Juan Casteñeda of the University of Buckingham is published this morning, and is available in PDF form, here.

The study concludes that the commonly accepted figure of 171,300 tonnes (end-2011) overstates gold stocks by 16,056 tonnes.

In my opinion the principal implications are as follows:

·         The level of global physical gold stocks is important in the context of remonetisation of gold, which is likely to become increasingly discussed in time, given the accelerating pace of monetary creation by central banks.

·         There is an as-yet unappreciated transfer of wealth in the form of bullion from the West to the East. This transfer has been going on for decades, starting: a)with the Middle East OPEC members in the 1970s onwards; b) to the  Indian sub-continent through the eighties and nineties and to the present day; and c) to the Chinese population in the last decade (and less obviously the citizens of other populous SE Asian states). Therefore the West has already ceded control of the world’s gold, leaving a significantly smaller balance in the West than commonly believed.

·         The study finds that gold stocks are over-estimated by 10.3%. Given the bulk of the world’s gold bullion is no longer in the possession of the advanced Western economies, the shortage of bullion backing Western physical and futures markets is considerably more acute than commonly realised.

I hope this excellent paper sparks a debate about the consequences for the West of having driven gold out of circulation as a monetary asset, at a time when paper currencies are firmly on the path to their own destruction.

Alasdair Macleod

Head of research, GoldMoney

Mob: 07790 419403

Alasdair.Macleod@GoldMoney.com

Twitter @MacleodFinance



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