Report challenges data on gold stock level

Gold bars 1Widely used data on gold overestimates the global stock level above ground by 10%, according to new research.

The existing data on gold stock comes from Thomson Reuters GFMS, a consultancy that specialises in precious metals. It is used as a measure by the World Gold Council, which claimed that in December 2011 there were 171,300 tonnes of gold stock above ground.

James Turk, founder of the GoldMoney Foundation, claims in a paper that this figure is 10% too high because it overestimates both the amount of gold above ground in 1492 and the rate at which gold was mined in years since.

Turk said the Thomson Reuters GFMS data relied on an academic study, which he claimed was flawed, that estimated gold production prior to 1492 to be 12,729 tonnes. Turk favours a more recent study that claims the figure was 297 tonnes.

The data is difficult to prove because there are no formal records of gold production prior to 1492 and records in the next few centuries may be unreliable. 1492 is used as a benchmark because it was the year Columbus sailed to America.

The price of gold, which is seen as a safe store of value, has roughly doubled since 2008, as investors have sought security in a world of volatile equity markets. Quantitative easing has given a further spur, as investors have sought to hedge their portfolios against inflation. The metal is currently trading at $1,746 (€1,350) an ounce.

In recent years, investors have tended to access gold through exchange-traded funds that track the gold price. Exchange-traded products that track physical gold had $260 million of inflows in the first week of October, according to data from ETF Securities.

Commodity sector funds analysed by data firm EPFR Global, many of which track gold or precious metals, have had $19 billion of net inflows this year.

At time of publication, the World Gold Council had not yet responded to a request to comment on Turk's claims.

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