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GOLD, Gold and XAUUSD - page 154

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Andrei Savchenko #: Everyone’s waiting for 5,000.
If something happens in the Middle East now, the Arabs will run out of money and they’ll be selling gold.

Andrei Savchenko #:

They will be selling gold.


But there are companies with a production cost of $2,600. They’ll be very reluctant to sell it for $3,500. They’ll pull out, and there’ll be fewer offers to sell.
Andrei Savchenko #:

But there are companies with a production cost of $2,600. They’ll be very reluctant to sell it for $3,500. They’ll pull out, and there’ll be fewer offers to sell.
Russia is heavily selling/bartering away physical gold already. That merely begs the question... What impact does anyone owning/possessing physical gold instead of another doing so, have on the total amount of physical gold in global circulation?

How much ‘paper gold’ is there in the world, and how much physical gold?

There is no exact figure — ‘paper gold’ is not a single asset, but a range of instruments (futures, ETFs, unbacked accounts, derivatives), each with its own volume. But the order of magnitude is as follows.

Physical gold — the benchmark

Approximately 210,000–220,000 tonnes of gold have been accumulated on Earth, of which jewellery accounts for around 47 per cent, whilst roughly one-fifth consists of bullion, coins and central bank reserves. At a price of around $4,000 per ounce, this amounts to roughly $27 trillion.

How much ‘paper’ is backed by this

Estimates vary widely depending on what is included in the calculation, but all agree on the main point: there are many times more paper claims than there is physical metal.

  • The classic estimate is 100:1. For every ounce of physical gold, there are up to 100 ounces of paper claims via futures, ETFs and accounts. At current prices, this means that the volume of the ‘paper’ market is, roughly speaking, hundreds of trillions of dollars, compared with tens of trillions of real metal.
  • The situationon the exchanges is even more extreme. The London LBMA moves more than 2,100 tonnes of gold daily through unbacked accounts, whilst the physical base underpinning these flows is around 15,000 tonnes. In other words, the monthly turnover exceeds the entire physical backing several times over.
  • More radical estimates put the ratio at 200–250:1 and higher. Calculations have even suggested ratios of up to 300–400:1 for silver and gold when all derivatives and accounts are taken into account. gold-standard.org +1
  • Gold derivatives held by the largest US banks amount to over $5 trillion in nominal value across just four banks; in the eurozone, the nominal value of gold derivatives reached €1 trillion in March 2025. discoveryalert.com.au +1

ETFs are a different story: the largest fund, GLD, holds reserves of ~870 tonnes with potential liabilities exceeding 1,100 tonnes, whilst ordinary investors cannot redeem the gold physically — only large ‘authorised participants’ can do so in batches worth tens of millions of dollars.

What does this mean?

In short: paper claims on gold are many times – by some estimates, two orders of magnitude – greater than the actual amount of gold. The system operates on a ‘fractional reserve’ basis: almost all transactions (according to some data, up to 95 per cent) are settled in cash rather than by the transfer of bullion. As long as there is sufficient trust, the gap is insignificant; but in a crisis, it becomes the main risk — and this is precisely what explains the premiums on physical metal relative to the ‘paper’ price, which rose to 5–10 per cent on coins in 2025. shopglobalcoin.com +1

It is worth stating clearly: the 100:1 ratio is an estimate, not an accounting fact, and different methodologies yield figures ranging from tens to hundreds of times that amount. However, none of the market participants dispute the principle that ‘paper is worth many times more than metal’.

So draw your own conclusions.

Uladzimir Izerski #:
As long as there is sufficient trust, the gap is insignificant; but in a crisis, it becomes the main risk — and this is precisely what explains the premiums on physical metal relative to the ‘paper’ price...
Thank you for your answer given on behalf of AI. I believe that the one-liner, quoted directly above this reply, is AI's main idea and it is accurate.
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