Gold will hit $17,000 an ounce if the rest of the world follows Vietnam's lead

    According to the World Gold Council, Vietnam imported $2.3 billion worth of gold last year.  

     With a GDP of just $92.8 billion, that’s 2.4% of GDP.

     Now, that’s not a heck of a lot.  Most people can save $2.40 for every $100 they earn to put it into gold.  Heck, I put more like 10% of my income into precious metals.

    But what if the rest of the world were to follow Vietnam’s lead and invest 2.4% of the world’s GDP into gold?

     With a nominal GDP of $58 trillion (PPP is more like $70 trillion), putting just 2.4% into gold would be $1,392 billion a year.

     At $1,250 an ounce, that would translate into 1,136 million ounces of gold per year.  But global mine production is just 2,554 tonnes, or 82.1 million ounces.

     So, for prices to be stable (and assuming nobody uses gold for dentistry or electronics and all jewellery is made from recycled gold) 82.1 million ounces would have to be worth $1,392 billion: $17,000 an ounce.

     Will we ever get to that number?  Absolutely, and in our lifetimes… but by the time we do, the Federal Reserve will have printed so much more money that $17,000 won’t be a realistic end point — it’ll just be a waypoint that whizzes past as fiat currencies continue their slide into oblivion. 

    Cheers,

    Peter.