How you view the importance of gold is probably shaped by the role it plays in your life. For many consumers, gold is simply a beautiful yellow metal used for jewelry given on special occasions like weddings and anniversaries.
On the other hand, if you run a central bank, you see gold as both an ally and an enemy. You know gold is one of the vital criteria used by other nations to evaluate your country’s stability, but you hate committing assets to purchase and hold gold. Nonetheless, you, like central bankers in many countries, are now buying gold to allay concerns about the world’s economic instabilities.
Of course, if you are involved in any number of industries and technologies, including medical research, you see this precious metal as an irreplaceable material for numerous applications.
What If Gold Disappeared Tomorrow?
If one was to speculate about any number of potential disasters, it provides powerful insights to imagine what would happen if currently mined and in-use gold simply ceased to exist at the stroke of midnight this New Year’s Eve. It is only by envisioning a world without gold that we can grasp just how vital this precious metal truly is. 1
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What a World Without Gold Would Look Like
The first thing people would notice is their jewelry and rings falling apart. Jewelry accounts for more than fifty percent of the demand for gold across the globe. There would likely be public outcry in the China, India, and across the country, as the U.S. and these eastern nations are the biggest consumers of gold jewelry.
Communication and commerce would grind to a halt as smartphones, laptops, and other tech devices stopped working. There are approximately ten troy ounces of gold in every ton of smartphones, and even that small amount is essential to the functioning of these and a vast majority of other electronic devices. 2
Many people would feel the impact of a world without gold in an uncomfortable or even tragic way. Some would all of a sudden be missing teeth and others the heart stents that help keep them alive. Special treatments for cancer and arthritis and recently developed tests for many illnesses and diseases that rely on gold would cease.
Industry & Transportation
Industry would come to a standstill in general, and many specialty fields would go out of business, from aerospace engineering to nanotechnology to certain types of environmental control and protection. 3 Our satellites would begin their slow descent back into the atmosphere, and we would be unable to use ATMs or operate modern vehicles or planes. An astronaut sent out to see what was happening to his capsule would be blinded because the gold coating of his visor was gone.
Financial Markets & Economies
Once this loss was noted, bankers and collectors would rush to their safes and vaults and gasp in horror at the missing assets. Once this reality reached the markets, it is difficult to guess just how catastrophic their reaction would be. While purveyors of paper currency as an economic miracle currently rule the roost, the idea that gold ultimately backs up most economies is the “safety pin” that holds global markets together.
Of course, the world cannot do without gold! Gold miners would go to work to recover more of the yellow metal, and new processes would be developed to extract gold from the sea and other sources. 4 However, this gold would be much more expensive, and would perhaps truly reflect the value of gold that draws so many knowledgeable investors. 5