Gold has been an asset that holds value over long periods and is used to hedge against market downturns. So, how big is the gold market cap?
What Is Market Cap?
The market capitalization of a commodity, company, or industry is its total current value of it on the open market. Investing is like placing a bet in a card game, and the market capitalization is the handle. Gold's impressive market cap over the years is part of its stability in the face of geopolitical turmoil and the laws of supply and demand, and it remains an excellent investment choice globally.
Calculating Market Cap
Depending on the asset type it is calculated in different ways:
- For precious metals(gold) the Market Cap is calculated by multiplying its price with an estimation of the quantity of metal that has been mined so far. These estimations are updated annually
- For stocks, it is calculated by multiplying the number of outstanding shares with the current share price
- The Market Cap of cryptocurrencies is calculated by multiplying the circulating supply with the coin's price.
So, How big is the gold market cap?
Recent data from the World Gold Council revealed 197,500 metric tons of above-ground gold reserves in circulation. If you combine that with central banks' precious metal holdings worldwide, the total gold market cap sits at around $11.389 trillion.
Central banks are the leading buyers of gold worldwide because economies are too large to predict or control. Gold is the only commodity that doesn't show signs of debasement, even during the worst financial crises. In fact, around 35,000 metric tons of the world's 197,500 above-ground gold stash sits in reserves like the United States Bullion Depository in Fort Knox and the New York Federal Reserve.
Precious Metal: How Big Is The Gold Market Cap? Hopefully, this article can provide you with a better understanding of the gold market cap.
