How Is Gold Impacted By Runaway Debt?

According to management consulting firm McKinsey & Company, the world now sits beneath a mountain of debt worth an astonishing $200 trillion. That’s greater than twice the global GDP, which is currently $75 trillion. If we were to distribute this amount equally to every man, woman and child on the face of the earth, we would each owe around $28,000. More surprising is that if gold backed total global debt 100 percent, it would be valued at $33,900 per ounce.

Try convincing your gold dealer of this next time you want to sell a coin.

Besides imagining being able to buy a new BMW with a single American Gold Eagle coin, why is it important to think of the yellow metal in this way?

The Case of the Runaway Debt

To answer that, let’s back up a bit. For thousands of years, in countless cultures around the world, gold has been recognized as an exceptional store of value and, as such, accepted in all forms of transactions. A new archeological discovery, in fact, shows that the metal was being traded in the British Isles as far back as 2500 B.C., an entire millennium before the world’s first gold coins were minted in what is now present-day Turkey.