ABOVEGROUND STOCKS

In addition to newly mined metal, gold can also be sourced from aboveground stocks, either through the recycling of fabricated products (see section that follows on scrap) or the mobilization of bullion stocks. The latter comprises central bank sales (see following); disinvestment by individuals (covered in the section on investment); and advance sales—the hedging described previously—by mining companies. During the past decade, supply from aboveground stocks has typically accounted for about a third of annual supply.

GFMS estimates put aboveground stocks of gold at the end of 2007 at 161,000 tonnes (the equivalent of over 60 years of current mine production) [1]. It is the sheer scale of these aboveground stocks that sets the yellow metal apart from other commodities. The reason for this buildup is primarily the virtual indestructibility of the metal—almost all of the gold mined throughout history still exists in some form. The metal’s durability also allowed gold to become a highly suitable store of value and form of money over the ages, for individuals and state bodies.

The composition of aboveground stocks is also important because it determines the speed and likelihood of the return of the metal to the marketplace. Gold as bullion (usually in bar form) typically comes back the most readily, and stocks in this form stood at about 55,500 tonnes. Just over half of this bullion is held by central banks and other official sector bodies, with the balance being held by private individuals and institutions. More, however, just over half of the total, is held as jewelry items. Lastly, about 19,000 tonnes have been absorbed by other types of fabrication (such as electronics), the least likely area to get recycled back into the market. Just under 4,000 tonnes cannot be accounted for and can be considered irretrievably lost or as true consumption. This would include manufactured items containing gold that have gone to landfill, any metal lost at sea, and so forth.