22 gold stats as the commodity breaks $2,000 per ounce
- Humans have been enamoured with gold for 6,000 years, and today it trades as a major financial asset
- The US dollar was backed by gold until 1971, when President Nixon abandoned it
- Gold outperformed stocks last year as markets crumbled, however in the long term has lagged badly behind
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Gold is one of the most recognisable assets in the world – both inside and outside the world of finance.
Humans have been enamoured with gold as far back as 4,000 BC. Today, we still talk about it. Not only that, but it holds a rather unique place in financial markets.
Traditionally known as an inflation hedge and an uncorrelated asset, investors typically purchase gold to diversify their portfolios. Here are eighteen statistics about this quirky asset that we call gold.
1. Gold backed the US dollar between 1944 and 1971
Many don’t realise that the fiat age of “paper” currency has only been around for half a century or so.
In 1971, President Richard Nixon went on TV to announce that US dollars would no longer be redeemable for gold, officially severing the agreement which had been in place since the Bretton-Woods conference in 1944.
Source: Richard Nixon
2. The UK accidentally adopted the gold standard under Sir Isaac Newton in 1717
In 1717, Sir Isaac Newton was the master of the Royal Mint. He mistakenly set the exchange rate for gold to silver too low, resulting in such a run on gold that all the silver coins in the country went out of circulation as they were traded in.
In such a manner, Britain had adopted a de facto gold standard.
Source: Globalizing Capital: A History of the International Monetary System – Third Edition
3. Germany abandoned the gold standard in 1914 and suffered hyperinflation less than a decade later
Germany first adopted the gold standard in 1871, however came off it in 1914, primarily as a result of expensive war reparations.
Less than a decade later, they suffered hyperinflation and the German Papiermark collapsed. They briefly returned to the gold standard (or a de facto gold standard) in 1923, but ultimately abandoned it for good.
Source: World Population Review
4. Switzerland was one of the last countries to hold ties to the gold standard, only abandoning it in 1999
It’s not so long ago that Switzerland abandoned the gold standard. In a vote to modernise the 125-year-old Constitution, one of the motions was to sever ties between the nation’s currency and gold.
The motion passed with 59% of the votes.
Source: New York Times
5. Gold is trading at $2,000 per ounce, its highest level since Russia invaded Ukraine
After abandoning the gold standard in 1999, Switzerland nearly went back to it 15 years later. Or, some derivative of it, at least.
The “Save our Swiss Gold” movement pushed for the Swiss central bank to hold at least 20% of its assets in gold, prohibit selling gold in future and bring all its gold reserves back to Switzerland.
Despite opinion polls showing support for the motion as high as 44% in the months running up to the vote, the motion was ultimately defeated, with 78% voting against.
6. Gold is trading at $2,000 per ounce, its highest level since Russia invaded Ukraine
Gold this week breached the $2,000 barrier for the first time since Russia invaded Ukraine in February 2022.
7. The stock market has doubled gold’s returns over the last decade
Financial markets experienced one of the longest and most explosive bull markets after the Great Financial Crash in 2008, with markets rising nearly constantly until the pullback in 2022.
Gold, however, has lagged behind. In the last decade, it is up 30%, far below the 157% that the S&P 500 has banked in the same timeframe.
In other words, if you invested $1 in gold ten years ago, you would have $1.30 today, whereas the same investment in the S&P 500 would mean you’d hold $2.57 today.
8. Gold was one of the few assets to avoid losses in 2022, gaining 0.4%
Despite lagging the stock market over a longer timeframe, last year saw gold investors relieved that they had chosen the metal.
It returned more or less even on the year, closing up 0.4%. This compared to crushing losses in many other risk asset classes as the world transitioned to a new paradigm of tight monetary policy amid rampant inflation.
It was a rare year where both equity and bond investors lost money, and most risk assets posted their worst returns since 2008.
The S&P 500 pared back nearly 20%, the Nasdaq lost 33% and Bitcoin shed 65%.
9. Gold traded at a fixed price of $35 per ounce under the US gold standard until 1971
Under the Gold Standard, the price of gold was fixed at $35 per ounce. Towards the end of the regime, this grossly deviated from the rate that was offered on the black market, as the dollar was repeatedly devalued.
Ultimately, this led to Nixon abandoning the Gold Standard, and the price is currently $2,000 per ounce.
10. President Roosevelt made it illegal to own more than $100 of gold in the United States in 1933
During the Great Depression, the Federal Reserve was constrained from printing money as a result of depleting gold resources (due to the Federal Reserve Act of 1913).
As a result, President Roosevelt announced Executive Order 6102, “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”
It gave the public less than four weeks to deliver all gold for the fixed price of $20,67 per ounce.
11. Since Executive Order 6102 in 1933, the price of gold has increased 96X
Since Roosevelt’s Order in 1933, the price of gold has increased 96X from the fixed $20.67 price he announced.
This is a prime point of gold bugs, who stand behind gold’s ability to preserve one’s purchasing power and act as an inflation hedge.
12. If you held $100 dollars worth of gold in 1971, it would be worth $2,000 today
Gold has ballooned to $2,000 per ounce from the artificially low fixed price of $35 per ounce during the Gold Standard.
This means that $100 of gold, equivalent to 2.86 ounces, would be worth over $5,700 today.
However, it is important to note that $35 was an artificially low price. In reality, the price was closer to $100, meaning you would have netted only about one ounce in 1971, equivalent to $2,000 today.
13. Gold has returned an average of 7.78% since 1971
Another way of looking at the previous stat is that, since the abandonment of the gold standard in 1971, gold has returned an average of 7.78%.
14. Gold has not kept up with stocks. A $100 in gold in 1974 would be worth $1,020 today. The same investment in the S&P 500 would be worth $16,800
To highlight how poorly gold has performed compared to stocks, it is best to take 1974 as a starting point, after the gold standard had been fully transitioned away from.
A $100 in gold would be worth $1,020 today, whereas if you chose stocks in the form of the S&P 500, it would be worth $16,800.
Source: officialdata.org, dollartimes.com
15. Humans have been collecting gold for 6,000 years
We don’t know for certain when humanity’s love affair with gold started. However, we know it was as far back as 4000 BC.
Flakes of gold have been found in Paleolithic caves from this period. Since then, it pops up across archaeological texts and ancient sites all across the globe.
16. Gold was first used as money in Ancient Egypt in 1500 BC
Gold may have been subject to humanity’s desires since 4000 BC, but it was not until 1500 BC that it first became used as a medium of exchange.
In Ancient Egypt, the shekel was a coin which weighed 11.3 grams, comprised of two-thirds gold and one-third silver, and became the standard unit of measurement in the Middle East.
Source: Focus Economics
17. Gold first broke the $1,000 per ounce barrier in March 2008, when the US bank Bear Stearns collapsed
Bear Stearns collapsed in March 2008, sold to JP Morgan at a heavily distressed price to prevent bankrutpcy.
Amid the chaos in the banking sector, gold crossed $1,000 per ounce for the first time ever.
18. The early 21st century was strong for gold, with the asset multiplying by 7X between 2001 and 2011
In September 2001, gold traded for $271 per ounce. Ten years later, it was 7X that number, trading at $1896 per ounce.
The explosive decade for gold included the Great Financial Crash of 2008, which crushed stocks and other risk assets around the world.
Since then, however, gold has lagged badly, and today, twelve years later, trades only marginally above that $1,896 mark at $2,000 per ounce.
20. The only gold producer in the S&P 500, Newmont Corporation, fell 13.5% in 2022
There is only one gold miner in the S&P 500, Newmont Corporation.
It has a market cap of $36.7 billion. However, investors were better off with gold last year, as the company fell 13.5% compared to gold gaining 0.4%.
20. The supply of gold increased 2% in 2022
Gold is often seen as “hard money” because it cannot be printed out of thin air like fiat currencies. However, it does not quite have a fixed cap, as mining does cover small amounts of new reserves.
In 2022, the supply of gold increased by 2%.
21. Two-thirds of all the world’s gold has been mined since 1950
Of the estimated 208,874 tonnes of gold currently in circulation, two-thirds of it has been mined since 1950.
22. Central banks hold 17% of the above-ground stock of gold
Looking at the world’s above-ground stock of gold, 17% is held by central banks. Bars and coins, including gold-backed ETFs, account for 22%.
Jewellery remains the highest use case, with 46% of the stock designated for this purpose.
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