New World Economics

By: Nathan Lewis
all contents copyright Nathan Lewis 2005-2013

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Contact: nathan@newworldeconomics.com
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"Easily the most important book of 2013 ... and the best book on money that's yet been written"
-- John Tamny (RealClearMarkets.com)


Want a basic introduction? Watch a thirty-minute presentation given at the Cato Institute in February 2014,
or this
two-minute video on how to introduce and use a parallel currency.

Read my previous book, Gold: the Once and Future Money (2007), available in five languages worldwide.

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Click Here for the Traditional City/Heroic Materialism Archive
 




Gold Holdings of Central Banks and Governments 2: The Larger View, 1850-2000


August 17, 2014


We've been looking at some history of the gold holdings of central banks and governments.

August 10, 2014: Gold Holdings of Central Banks and Governments, 1913-1941
August 3, 2014: The Reichsbank, 1924-1941
July 27, 2014: The Bank of France, 1914-1941

July 20, 2014: The Bank of England, 1914-1941
July 18, 2014: Foreign Exchange Rates 1913-1941 #8: A Brief Summary
June 22, 2014: Foreign Exchange Rates 1913-1941 #7: Switzerland's Independence; Turkey Avoids Devaluation
June 1, 2014: Foreign Exchange Rates 1913-1941 #6: Hyperinflation in Poland; Russia's WWI Decline
May 25, 2014: Foreign Exchange Rates 1913-1941 #5: Devaluations By Japan and France

April 27, 2014: Foreign Exchange Rates 1913-1941 #4: Britain Leads the World Into Currency Chaos

April 20, 2014: Foreign Exchange Rates 1913-1941 #3: The Brief Rebuilding of the World Gold Standard System

April 6, 2014: Foreign Exchange Rates 1913-1941 #2: The Currency Upheavals of the Interwar Period
March 30, 2014: Foreign Exchange Rates 1913-1941: Just Looking At the Data
January 26, 2014: The Federal Reserve in the 1930s #2: Interest Rates
January 19, 2014: The Federal Reserve in the 1930s
December 23, 2012: The Federal Reserve in the 1920s 4: The Historical Record
December 16, 2012: The Federal Reserve in the 1920s 3: Balance Sheet and Base Money
November 25, 2012: The Federal Reserve in the 1920s 2: Interest Rates
November 18, 2012: The Federal Reserve in the 1920s


Today, we are going to put this data in a little more context. I've reviewed this before, but this is a nice way to round out this series.

The source for most of our data today comes from "Central Bank Gold Reserves: An historical perspective since 1845," World Gold Council Research Study No. 23, by Timothy Green, 1999.

You can get the paper by clicking here.





Here's a look at the holdings of central banks and governments, compared to the estimated total aboveground world gold supply. In general, there was a trend toward central bank/government accumulation of bullion up to about 1950. It went up a little more afterwards, but not really keeping pace with gold production from mines. After 1965 or so, government gold holdings generally declined. Today, they make up a much smaller percentage of total aboveground gold than they did in the past.



Here's a look at total holdings of central banks and governments, compared to mining production, from 1915 to 1999. As we can see, even in the accumulation years before 1950, the pace of aggregate accumulation was less than mining production, and didn't really have any big spikes until 1941, during WWII.



Here's some similar data, here in five-year intervals. Central banks gradually accumulated gold in the pre-1914 era -- that was when central banks were generally established, following the pattern of the Bank of England, around the world. Gold coins gradually fell out of favor, exchanged for more convenient banknotes with central banks. Note that gold coins didn't really make a revival even in the turmoil of WWI, the Great Depression, and WWII. You might think that people would want to hoard gold coins in a coffee can, in those conditions, but actually they didn't.



This is the same data, here represented as a percentage of estimated world aboveground gold bullion supply, from 1850-1950. Although central banks and governments accumulated a lot of gold bullion during the latter 19th century, this was offset by a decrease in the use of gold coins, so that the total "monetary gold," coins and bank reserves, didn't actually change that much as a percentage of aboveground gold. Note again the decrease in the use of gold coins during the difficult 1914-1950 period. Overall monetary gold was pretty flat between 1910 and 1935, as a percentage of total aboveground gold.

There are a lot of hypotheses out there that WWI, the supposed "gold exchange standard" of the 1920s, the Great Depression, and WWII led to major accumulation or disaccumulation of gold bullion for various reasons, which might have some consequences if it in fact occurred. These are reasonable hypotheses, but alas, ones that are not supported by historical fact. So, they should be abandoned.



Recent Commentary:


Click Here for the Traditional City/Heroic Materialism Archive
Click Here for the How Banks Work series
Click Here for the NWE Six-Month Ultimate Health and Fitness Program

August 7, 2014: Don't "Kitchen Sink" the Monetary Debate. Gold-Based Money Is Simple.
August 3, 2014: The Reichsbank, 1924-1941
July 27, 2014: The Bank of France, 1914-1941

July 24, 2014: On the Path To a Better Monetary System: Bretton Woods Didn't Fail Because of the "Balance of Payments"

July 20, 2014: The Bank of England, 1914-1941
July 18, 2014: Foreign Exchange Rates 1913-1941 #8: A Brief Summary
July 17, 2014: Devaluations of the 1930s Don't Justify Today's Funny Money Excess
July 13, 2014: HTMAPODWTTC 13: Getting Other People's Cooperation
July 10, 2014: Paul Volcker Dreams of a "New Bretton Woods." But What Would That Look Like?

July 3, 2014: The "Income Inequality" Debate Is Not About Income Inequality
June 22, 2014: Foreign Exchange Rates 1913-1941 #7: Switzerland's Independence; Turkey Avoids Devaluation
June 19, 2014: Explaining "Freaky Friday" -- How the Gold Guys Became Their Own Worst Enemies

June 4, 2014: Health and Fitness 2014: The Rest of Your Life
June 3, 2014: Book Review: Steve Forbes Leads the New Renaissance in Monetary Understanding
June 1, 2014: Foreign Exchange Rates 1913-1941 #6: Hyperinflation in Poland; Russia's WWI Decline
May 25, 2014: Foreign Exchange Rates 1913-1941 #5: Devaluations By Japan and France
May 22, 2014: GoldMoney is the Answer to "Nonphysical Currency" Ambitions
May 18, 2014: HTMAPODWTTC 12: Trailer Parks and Mobile Home Parks
May 15, 2014: Book Review: Ron Paul's End the Fed Condenses a Lifetime of Wisdom and Experience

May 8, 2014: Environmentalism is the Key to Growth
April 27, 2014: Foreign Exchange Rates 1913-1941 #4: Britain Leads the World Into Currency Chaos

April 20, 2014: Foreign Exchange Rates 1913-1941 #3: The Brief Rebuilding of the World Gold Standard System

April 17, 2014: China Doesn't Need Much Gold To Create a Gold-Based Dollar Alternative

April 13, 2014: Arterial Streets and Grand Boulevards
April 6, 2014: Foreign Exchange Rates 1913-1941 #2: The Currency Upheavals of the Interwar Period

March 30, 2014: Foreign Exchange Rates 1913-1941: Just Looking At the Data

March 20, 2014: The Gold Standard Guys Are Their Own Worst Enemies

March 13, 2014: Why I Made My Latest Book Available For Free

March 6, 2014: Bitcoin Proves Friedman's Big Plan Was a Joke

March 2, 2014: The Eco-Technic Civilization


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