How Money Really Works, Part 10: Why Gold Still Holds Value

7. Why is gold so rare

Almost all the gold ever mined still exists today. Here is why gold still holds value, in seven parts. Number seven: why is gold so rare? Finding a one-ounce gold nugget is rarer than finding a five-carat diamond, says the World Gold Council, the gold industry's own group.

Over the last ten years, new mining added about 1.8% a year to all the gold above ground, it says. By our count, if that average held, the gold above ground would take about thirty-nine years to double. That slow growth reinforces gold's scarcity over time, the council adds. In the second quarter of twenty twenty-six, mine production rose 2% from a year before, the council reports.

Where and how gold can be bought changes from place to place. Rare is only half of it, and number six shows why gold lasts. Subscribe for the next parts of this series: every source, from the IMF to the World Gold Council, is linked below.

6. Why does gold last when other things wear out

Number six: why does gold last when other things wear out? Gold is virtually indestructible, the World Gold Council says, so almost all the gold ever mined still exists in some form. The council puts it plainly: the stock is permanent. It is held as jewellery, coins, bars, central bank reserves, or in other uses, the council explains.

Pure gold is malleable, so mixing in other metals gives jewellery more durability, the council says. Because gold can be recycled indefinitely, a large part of that stock can potentially be sold again. By our count, recycled gold made up about a quarter of all the gold supplied in the second quarter of twenty twenty-six. Recycling was 6% lower than a year before, as prices below the first quarter's discouraged selling old jewellery, the council says.

Rules for buying and selling gold vary by place. Number five shows who holds all that gold today.

5. Who holds all the gold above ground

Number five: who holds all the gold above ground? Jewellery is the largest share, about 45% of all gold above ground, the World Gold Council estimates. Bars and coins hold about 21%, and central banks and other official institutions about 18%. Gold-backed exchange-traded funds hold about 2%, private holdings of institutions and wealthy investors about four, and technology and other industrial uses about ten.

Electronics take about 80% of the gold used in technology, the council says. Most kinds of chips use gold as a coating or as thin bonding wires, it adds. Small bars and coins made up about two-thirds of gold investment demand, and a quarter of all demand, over the past decade. Gold-backed exchange-traded funds account for about a third of investment demand, the council says.

What people are allowed to hold differs from place to place. One group of holders keeps gold for a different reason, and number four is about them.

4. Why do central banks still hold gold

Number four: why do central banks still hold gold? Gold once played a central role in the international monetary system, when currency rates were linked to its price, the IMF says. That fixed currency system ended in nineteen seventy-three, diminishing gold's role, it adds. Yet the IMF itself remains one of the world's largest official holders of gold.

An IMF paper found that central bank gold holdings drifted down for most of four decades, then rose after the global financial crisis. It points to gold's appeal as a safe haven in volatile times, when other assets pay little. Governments hold large amounts of gold for financial stability and strategic reasons, the World Gold Council says. The council calls gold a scarce asset that is no one's liability, meaning it is not anyone's debt.

In the council's twenty twenty-six survey, 90% of responding central banks called gold's crisis performance relevant to holding it. 84% pointed to its role as a store of value, and 83% to diversification. In the second quarter of twenty twenty-six, central banks' net gold purchases were a record for a second quarter, the council reports. How much gold central banks hold differs a lot from one to the next, the council notes.

That's four of the seven: gold is rare, it lasts, many kinds of buyers hold it, and central banks keep it. Next, what you actually pay for when you buy gold.

3. What exactly are you paying for when you buy gold

Number three: what exactly are you paying for when you buy gold? Gold's weight is measured in troy ounces, and one troy ounce is about 31.1 grams, the World Gold Council says. Its purity is measured in carats: twenty-four carat is pure gold with no other metals. Eighteen carat gold is 75% gold, with the rest often copper or silver.

Fourteen carat is about 58% gold, the council's chart shows. In practice, gold can only be refined to 999.9 parts per thousand. Bullion coins and bars share a common investment-grade purity and weight, an industry regulator's guide says. Numismatic coins are different: the term means they are rare or collectible.

Bullion coins carry a face value, but their value comes from their gold content, the council says. Investment coins are usually between 91.67 and 99.99% gold, the council's guide says. Investment bars come from accredited makers, with a purity between 99.5 and 99.99%. The spot price is the cash price for immediate delivery, quoted in dollars per troy ounce, an industry regulator's guide says.

In the second quarter of twenty twenty-six, the benchmark gold price averaged about $4,506 an ounce. That was 8% below the first-quarter record, but 37% above a year earlier. By our count, at that average, one gram of gold was priced at about $145, before any dealer premium. Bars and coins cost a premium over the spot price, and buyers must handle delivery, storage and insurance, the council says.

Prices, taxes and dealer rules differ where you live. In one breath: gold is rare, it lasts, many buyers hold it, central banks keep it, and it's priced by the ounce. For more on prices over time, the video on protecting your money from inflation is linked on screen. But what gold can't do matters too, and number two covers it.

2. Can gold's price fall

Number two: can gold's price fall? Yes: metal prices can rise and fall like any other investment, and sometimes they swing a lot, an industry regulator's guide says. Precious metals are often promoted as a safe haven, but that doesn't make them immune from price declines, the guide adds. The World Gold Council itself notes that past performance is not necessarily indicative of future results.

A dealer always sells metal above the spot price and buys it back below it, the regulator's other guide says. That gap is the dealer's spread, and each dealer sets its own, so it pays to compare. The bigger the spread and other costs, the more the spot price must rise for you to make a profit. Other possible costs include storage, insurance and administrative fees, it adds.

Funds that track metal prices come with their own fees and costs too, the guide adds. The regulator's tips page says to get all fees in writing and know what return you would need to break even. Before paying, ask the seller for a risk disclosure statement, the same page adds. Rules, taxes and dealer protections differ where you live.

Before number one, a guess: if all the gold ever mined were melted into one cube, how wide would each side be?

1. How wide is that cube of gold

Number one: how wide is that cube of gold, and what does it say about value? All the gold ever mined would fit in a cube about 22.6 meters on each side, the World Gold Council says. The council calls that a surprisingly small volume for such a valuable metal. So the first reason is scarcity, with new mining adding only a little each year.

The second is that gold lasts, so almost all of it is still around to be used again. The third is breadth: gold is bought by a diverse set of consumers and investors across the globe, the council says. Consumer demand, especially for jewellery, can be sensitive to income growth, culture and price levels, it adds. And because the old stock never goes away, the market is not set by new mining alone, the council explains.

That large existing stock can respond to changes in price, risk and preferences. The council notes that liquidity, buying or selling without moving the price much, is often cited as a core attribute of gold. Holding value is not a promise: prices still rise and fall, as number two showed. How gold can be owned and taxed differs where you live.

And that is why people and institutions still value gold: it is rare, it lasts, and many kinds of buyers want it. So, seven parts: why gold is rare, why it lasts, who holds it, and why central banks keep it. Then what you pay for, what gold can't do, and why people still value it. Today, you can open the World Gold Council's page on how much gold has been mined, linked below.

Which of the seven surprised you most? Tell us the number in the comments. Results vary, rules differ where you live, and this is information only, not financial advice. This is Wealth Filings.

If you want to see part eleven, subscribe now: it shows how lending money through bonds pays you back. Next on Wealth Filings, How Money Really Works, part eleven: how bonds pay you.