While immersing myself in the pro and con arguments over whether or not the U.S. should return to the gold standard raging at Megan McArdle's blog "Asymmetrical Information" over the last few days, I encountered more than one Ron Paul supporter asserting that gold was a better choice than ever as a currency candidate, because, as one poster wrote, "most people who know about gold would agree that most of the gold in this world has already been discovered."
The idea being that vast new discoveries of gold would not be likely to incite inflation.
Is this true? Have we reached peak gold? Edward Gresser, director of the "Trade and Global Markets Project" at the Progressive Policy Institute sent an e-mail pointing out that "between 5000 B.C. and 1960 A.D., people dug up about 80,000 tons of gold. Since 1960 they have dug up another 75,000 tons -- almost the equal of the whole rest of human history."
From his Trade Fact of Week newsletter:
Overall, gold production has climbed steadily for at least a century -- rising from 500 tons in 1904 to 965 tons in 1954, and 2,430 tons in 2004, according to the U.S. Geological Survey.
According to the World Gold Council, current annual production hovers at around 2500 tons a year.