Gold and Foreign Money Exchange Reserves Fall as They Are Pressured by Lowering Gold Prices – Part 1.

August 2nd, 2012

Best Exchange Rates UK reports on how gold and foreign money exchange reserves fell in January 2012, as result of declining gold prices and from direct repercussions in gains to the dollar which had an impact on best exchange rates for US dollars.

It is the second monthly negative hit in reserves and highlights the difficulty faced by the Reserve Bank at a time when the global economy is at an all time low. It also brings to light how small declines in the reserve currency and indeed gold prices, can account for such huge craters in the world economy.

Ever wondered just how much gold there is in the world? The answer is somewhere between 120,000 and 140,000 tonnes – this obviously does not include gold yet to be discovered. If we were to divide this up so that everybody in the world had an equal amount, this would equate to around 22-24 grams per person, so about 1.1-1.3 cubic centimetres, with a worth of around 300 US dollars, so nothing to get too over excited about.

The value of the whole lot is about $1.8 trillion! If you multiplied its value by about 3, you might be getting close to paying off the US government’s sovereign debt.

To put the worlds gold reserves into perspective and to understand its importance to the world economy and money exchange reserves – you might want to digest the following facts and figures. The world’s gold is worth about one fifteenth of that of international bond markets (that are valued at approximately $26 trillion). Bonds are composed of around two thirds western government debt and the worlds gold supply would pay about 8% of the international bond markets overall debt. If only it were that easy! These figures are based on gold at its current valuation, which goes up and down every day in the same way money exchange rates do. 75% of the gold in the world is not available to governments even if it could be used to pay off sovereign debts. Much of the gold wealth in the world is privately owned wealth in the form jewellery, coins and gold bullion and about 25% is held by central bank gold reserves. Gold is most certainly a sound investment. Look out for more interesting gold facts in part 2 of this article.