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11 Stunning Visualizations of Gold Show Its Value and Rarity

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The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

Since Ancient times, gold has served a very unique function in society.

Gold is extremely rare, impossible to create out of “thin air”, easily identifiable, malleable, and it does not tarnish. By nature of these properties, gold has been highly valued throughout history for every tiny ounce of weight. That’s why it’s been used by people for centuries as a monetary metal, a symbol of wealth, and a store of value.

Visualizing Gold’s Value and Rarity

With all that value coming from such a small package, sometimes it is hard to put gold’s immense worth into context.

The following 11 images help to capture this about gold, putting things into better perspective.

1. The U.S. median income, as a gold cube, easily fits in the palm of your hand.

U.S. Median Income as a Gold Cube

2. A gold cube worth $1 million, has sides that are 2/3 the length of a typical banknote.

One Million Dollars as a Gold Cube

3. All gold used for electrical connections in the Columbia Space Shuttle would be worth $1.6 million today.

All the Gold in the Columbia Space Shuttle in a Cube

4. Trump’s entire fortune of $3.7 billion as a gold cube would be shorter than Trump himself.

Donald Trump's fortune in a Gold Cube

5. As a gold cube, the entire value of the Bitcoin market would fit in a hallway.

The Bitcoin Market's Value as a Gold Cube

6. The fortune of the richest man on Earth, Bill Gates, would take up a single traffic lane.

Bill Gates' Wealth as a Gold Cube

7. The world’s entire annual production of gold is just a 5.5m sided (18 ft) cube.

Annual Gold Production a Gold Cube

8. Take the 147.3 million oz of gold out of Fort Knox, and it’s only slightly bigger.

All the Gold in Fort Knox Visualized as a Cube

9. All gold held by the Central Banks pales in comparison to the Brandenburg Gate.

The World's Central Banks Holdings as a Gold Cube

10. All gold mined in human history is dwarfed by the Statue of Liberty.

All Gold Mined in Human History Visualized as a Cube

11. To pay off $63 trillion of global sovereign debt, you’d need a gold cube the size of a building.

All Global Debt Visualized as a Gold Cube

Liked our visualizations of gold cubes? Check out this motion graphic video that shows how much money has been created by humans.

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

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Currency

Do You Know Where the British Pound is Heading?

This infographic uses the recent Brexit-related volatility of the British pound to illustrate how currency risk can impact an investor’s portfolio.

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In developed economies around the world, it’s generally expected that currencies will retain their purchasing power over time.

While this is most often the case, sometimes there are situations in which currency markets begin acting in ways that are less predictable.

Growing amounts of political or economic uncertainty, for example, can cause a currency to experience amplified levels of volatility — an environment in which it may see bigger ups and downs than most market participants are used to.

Brexit, Currency Risk, and the Pound

Today’s infographic comes to us from BlackRock, and it focuses in on the recent volatility of the British pound to illustrate how currency risk can impact a UK investor’s portfolio, and how this risk can be mitigated through currency hedging techniques.

Do You Know Where the British Pound is Heading?

Currency risk is present in any unhedged portfolio that holds investments denominated in international currencies.

When currencies experience increased levels of volatility — such as the British pound over the last five years — it can make this risk even more evident, ultimately impacting investor returns.

Brexit in Focus

In the lead-up to the EU Referendum in June 2016, and certainly afterwards, it’s been clear that the sterling has decoupled from its typical trading patterns.

Sterling volatility, as you would know, is at emerging market levels and has decoupled from other advanced economy pairs.

– Mark Carney, Bank of England (September 2019)

Every twist and turn in the Brexit saga has helped stoke fluctuations in the value of the pound, especially in usually stable pairs such as EUR/GBP or USD/GBP. It is possible that these swings could continue throughout 2020, and even beyond.

What impact can these fluctuations have on investment portfolios, and what can investors do to avoid them?

Currency Risk 101

The challenge of currency risk is that it can affect returns, either positively or negatively.

In other words, in addition to the risk you are exposed to by owning a particular investment, you are also at the mercy of foreign exchange rates. This means the performance of your investment could be canceled out by currency fluctuations, or returns could be amplified if exchange rate movements are to your advantage.

For example, in a typical UK portfolio that holds 60% global equities and 40% global bonds, currency risk actually has the highest projected risk contribution:

Projected Risk Contribution (60/40 Global Portfolio)

  • Foreign Exchange Risk: 4.55%
  • Equity Risk: 3.36%
  • Interest Rate Risk: 0.44%
  • Spread Risk: 0.06%
  • Total: 8.40%

When there is added volatility in currency markets, like in recent times, even a home-biased portfolio can be adversely affected. Given this, how can investors be sure they are getting a return from the underlying assets in a portfolio, instead of from unpredictable currency swings?

To Hedge, or Not to Hedge

There is a range of strategies that allow investors to hedge currency risk, but one simpler option may be to simply buy a fund (such as an ETF) that is hedged.

That said, not all investors may want to hedge currency risk. For example, an investor has a specific foreign exchange view (i.e. that a currency will go up or down in value) may want to purposefully get exposure to currency risk to take advantage of this view.

While it may not always make sense to use currency-hedged funds, they can reduce the overall investment risk on international exposures.

And if you are not so sure of where the pound is heading in coming months, now could potentially be a good time to explore such a tool.

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Central Banks

The History of Interest Rates Over 670 Years

Interest rates sit near generational lows — is this the new normal, or has it been the trend all along? We show a history of interest rates in this graphic.

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The History of Interest Rates Over 670 Years

Today, we live in a low-interest-rate environment, where the cost of borrowing for governments and institutions is lower than the historical average. It is easy to see that interest rates are at generational lows, but did you know that they are also at 670-year lows?

This week’s chart outlines the interest rates attached to loans dating back to the 1350s. Take a look at the diminishing history of the cost of debt—money has never been cheaper for governments to borrow than it is today.

The Birth of an Investing Class

Trade brought many good ideas to Europe, while helping spur the Renaissance and the development of the money economy.

Key European ports and trading nations, such as the Republic of Genoa or the Netherlands during the Renaissance period, help provide a good indication of the cost of borrowing in the early history of interest rates.

The Republic of Genoa: 4-5 year Lending Rate

Genoa became a junior associate of the Spanish Empire, with Genovese bankers financing many of the Spanish crown’s foreign endeavors.

Genovese bankers provided the Spanish royal family with credit and regular income. The Spanish crown also converted unreliable shipments of New World silver into capital for further ventures through bankers in Genoa.

Dutch Perpetual Bonds

A perpetual bond is a bond with no maturity date. Investors can treat this type of bond as an equity, not as debt. Issuers pay a coupon on perpetual bonds forever, and do not have to redeem the principal—much like the dividend from a blue-chip company.

By 1640, there was so much confidence in Holland’s public debt, that it made the refinancing of outstanding debt with a much lower interest rate of 5% possible.

Dutch provincial and municipal borrowers issued three types of debt:

  1. Promissory notes (Obligatiën): Short-term debt, in the form of bearer bonds, that was readily negotiable
  2. Redeemable bonds (Losrenten): Paid an annual interest to the holder, whose name appeared in a public-debt ledger until the loan was paid off
  3. Life annuities (Lijfrenten): Paid interest during the life of the buyer, where death cancels the principal

Unlike other countries where private bankers issued public debt, Holland dealt directly with prospective bondholders. They issued many bonds of small coupons that attracted small savers, like craftsmen and often women.

Rule Britannia: British Consols

In 1752, the British government converted all its outstanding debt into one bond, the Consolidated 3.5% Annuities, in order to reduce the interest rate it paid. Five years later, the annual interest rate on the stock dropped to 3%, adjusting the stock as Consolidated 3% Annuities.

The coupon rate remained at 3% until 1888, when the finance minister converted the Consolidated 3% Annuities, along with Reduced 3% Annuities (1752) and New 3% Annuities (1855), into a new bond─the 2.75% Consolidated Stock. The interest rate was further reduced to 2.5% in 1903.

Interest rates briefly went back up in 1927 when Winston Churchill issued a new government stock, the 4% Consols, as a partial refinancing of WWI war bonds.

American Ascendancy: The U.S. Treasury Notes

The United States Congress passed an act in 1870 authorizing three separate consol issues with redemption privileges after 10, 15, and 30 years. This was the beginning of what became known as Treasury Bills, the modern benchmark for interest rates.

The Great Inflation of the 1970s

In the 1970s, the global stock market was a mess. Over an 18-month period, the market lost 40% of its value. For close to a decade, few people wanted to invest in public markets. Economic growth was weak, resulting in double-digit unemployment rates.

The low interest policies of the Federal Reserve in the early ‘70s encouraged full employment, but also caused high inflation. Under new leadership, the central bank would later reverse its policies, raising interest rates to 20% in an effort to reset capitalism and encourage investment.

Looking Forward: Cheap Money

Since then, interest rates set by government debt have been rapidly declining, while the global economy has rapidly expanded. Further, financial crises have driven interest rates to just above zero in order to spur spending and investment.

It is clear that the arc of lending bends towards ever-decreasing interest rates, but how low can they go?

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