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Gold Reserves and Resources Overvalued?Juergen Mueller 1. Introduction The US Geological Survey ("USGS") is a 10.000 employee, > 1 Billion US$ Authority, collecting and reporting statistical data for Biology, Geography, Water, Geology, Environment and Health since 1879. In the field of minerals data from 1995 onwards are available within the USGS-Homepage. They provide data concerning worldwide mine production, reserves and resources for the main producing countries. In contrast to diamonds or oil, which were built generically over time with the aid of pressure and heat, science has got a pretty good picture about the structure of the earth's crust, i.e. the frequency of chemical elements. Chemical analyses of rocks, lava, water and of air samples from the upper earth's crust (including the mantle of air and water) supply average values for the frequency of the occurrence of the chemical elements. Thus, it is possible to calculate (or better to say estimate) how much gold or lead totally exist in the entire earth crust. The basic question of this article is: Which percentage of a specific metal is classified to be reserves and/or resources related to its total occurence in earth's upper crust? Using the given USGS data, one can calculate that the "minable" reserves and resources of the political metal Gold are estimated to be multiple times higher than any other precious or non-ferrous metal. For this article I used data for the following metals: Rhenium, Gold, Indium, Selenium, Silver, Cadmium, Antimony, Thallium, Molybdenum, Tin, Lead, Cobalt, Lithium, Niobium, Copper, Zinc, Nickel, Chrome, Vanadium, Manganese, Titanium and Aluminum. This list is arranged according to their occurance in earth's upper crust. In other words Rhenium is the most rare element, Aluminum the most frequent one of this group. Data for Palladium and Platinum are not indicated separately and hence unfortunately can't be considered in this calculation. 2. Calculations For the following two graphs some approximations have been used. However, they do not influence the result qualitatively.
3. Example of calculation: The element Lead has a proportion of 1,4 x 10-5% of the earth's crust. Thus the theoretical minable mass of Lead is calculated by 1,43 x 1018 Tons times 1,4 x 10-7 = 2,00 x 1013 tons. Within the USGS report for 2004 reserves for Lead are given with 67 billion tons, resources are 140 billion tons. Therefore 0,00335 parts per thousand (ppt) of the theoretical minable Lead are reserves and 0,00699 parts per thousand are classified to be resources:
When calculating the portions of reserves and resources following the given example for Lead, the result is as follows.  Graph 1: Reserves as PPT of the total mass in earth's crust For all elements on average there are 0,00322 ppt classified as reserves. The official USGS data however are suggesting 0,02734 ppt for Gold. In other words: The reserves of Gold in respect to their natural occurrence are given 8 times as high as for all other elements. If one neglects Gold for the calculation of the average value, the result is 0,00207 ppt. Using this value Gold reserves are 13 times higher, i.e. more than one magnitude. From the element Rhenium (which is also very rare in the earth's crust) there are only 0,0042 ppt given as resources. For the resources of Gold the qualititve picture is exactly the same:  Graph 2: Resources as PPT of the total mass in earth's crust
Graph 3: Table of calculationsSo the question arises: Why are reserves and resources for the political Gold so much overvalued in comparison to all other metals? One could argue it would fit in the picture. Inflation rates are officially calculated too low, Gold reserves much too high. Juergen Mueller 
321gold Inc |
