Gold

Visualizing U.S. Money Supply vs. Precious Metal Production in the COVID-19 Era

Published

3 years ago

October 8, 2020

Jenna Ross

U.S. Precious Metal Coin Production vs. Dollars Printed

U.S. Precious Metal Coin Production in the COVID-19 Era

Gold and silver have played an important role in money throughout history. Unlike modern currencies, they can’t be created out of thin air and derive value from their scarcity.

In the COVID-19 era, this difference has become more prominent as countries print vast amounts of currency to support their suffering economies. This graphic from Texas Precious Metals highlights how the value of U.S. precious metal coin production compares to U.S. money creation.

Year to Date Production

In this infographic, we have calculated the value of money supply added as well as bullion minted, and divided it by the U.S. population to get total production per person. Here’s how the January-September 2020 data breaks down:

	Total (Ounces)	Dollar Value	Dollar Value Per Person
U.S. Gold Ounces	826,000	$1.6B	$4.79
U.S. Silver Ounces	22,261,500	$544M	$1.65
U.S. Money Supply		$3.4T	$10,250.16
U.S. Debt		$3.8T	$11,578.36

Gold and silver dollar values based on Oct 5, 2020 spot prices of $1,915.93 and $24.47 respectively.

The value of new U.S. money supply was more than 2,100 times higher than the value of new gold minted. Compared to minted silver, the value of new U.S. money supply was over 6,000 times higher.

Production Per Day, Per State Over Time

Here’s how production has changed on a per day, per state basis since 2010:

	2010	2020 YTD (Jan-Sep)	Min-Max Production, 2010-2019
Minted Gold Coins	78oz	61oz	12oz-78oz
Minted Silver Coins	1,945oz	1,631oz	899oz-2,633oz
U.S. Dollars	$19M	$255M	$19M-$50M

Year to date, U.S. precious metal coin production is within a normal historical range. If production were to continue at the current rate through December, gold would be above historical norms at 81 ounces and silver would be within the normal range at 2,175 ounces.

The issuance of U.S. dollars tells a different story. Over the last nine months, the U.S. has already added 400% more dollars to its money supply than it did in the entirety of 2019—and there’s still three months left to go in the year.

A Macroeconomic View

Of course, current economic conditions have been a catalyst for the ballooning money supply. In response to the COVID-19 pandemic, the U.S. government has issued over $3 trillion in fiscal stimulus. In turn, the U.S. Federal Reserve has increased the money supply by $3.4 trillion from January to September 2020.

U.S. Money Supply

Put another way, for every ounce of gold created in 2020 there has been $4 million U.S. dollars added to the money supply.

The question for those looking for safe haven investments is: which of these will ultimately hold their value better?

Related Topics:money supply precious metals covid-19 silver u.s. money supply gold

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Mining

Charted: 30 Years of Central Bank Gold Demand

Globally, central banks bought a record 1,136 tonnes of gold in 2022. How has central bank gold demand changed over the last three decades?

Published

3 months ago

March 15, 2023

Govind Bhutada

30 Years of Central Bank Gold Demand

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

Did you know that nearly one-fifth of all the gold ever mined is held by central banks?

Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.

However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.

The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.

Why Do Central Banks Buy Gold?

Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:

Balancing foreign exchange reserves
Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil.
Hedging against fiat currencies
Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation.
Diversifying portfolios
Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.

The Switch from Selling to Buying

In the 1990s and early 2000s, central banks were net sellers of gold.

There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.

Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.

Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:

Rank	Country	Amount of Gold Bought (tonnes)	% of All Buying
#1	🇷🇺 Russia	1,888	28%
#2	🇨🇳 China	1,552	23%
#3	🇹🇷 Türkiye	541	8%
#4	🇮🇳 India	395	6%
#5	🇰🇿 Kazakhstan	345	5%
#6	🇺🇿 Uzbekistan	311	5%
#7	🇸🇦 Saudi Arabia	180	3%
#8	🇹🇭 Thailand	168	2%
#9	🇵🇱 Poland	128	2%
#10	🇲🇽 Mexico	115	2%
	Total	5,623	84%

Source: IMF

The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.

Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.

Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.

Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.

Which Central Banks Bought Gold in 2022?

In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.

Country	2022 Gold Purchases (tonnes)	% of Total
🇹🇷 Türkiye	148	13%
🇨🇳 China	62	5%
🇪🇬 Egypt	47	4%
🇶🇦 Qatar	33	3%
🇮🇶 Iraq	34	3%
🇮🇳 India	33	3%
🇦🇪 UAE	25	2%
🇰🇬 Kyrgyzstan	6	1%
🇹🇯 Tajikistan	4	0.4%
🇪🇨 Ecuador	3	0.3%
🌍 Unreported	741	65%
Total	1,136	100%

Türkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.

Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.

According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.