46. What about the scarcity of gold?
Gold is a metal that is relatively rare and therefore rare. But there has never been a scarcity of gold, for the simple reason that gold has almost no useful applications and it can be used again and again through recycling. As a result of mining, the above-ground gold supply grows by two to three thousand tonnes every year, gold that is used in jewellery, electronics, coins and bars. All that gold remains in circulation, which means that there is an ever-increasing supply of gold every year.
Unlike many other commodities and metals, gold has a relatively large supply compared to the annual demand. We call this ratio the stock to flow ratio. It is gold's exceptionally high stock-to-flow ratio that makes the precious metal so popular as an object to store wealth. The same is true to a lesser extent for silver. This metal is also widely available, with the difference that about half of the global demand for silver comes from the industry and that this is only 10 percent for gold.
Gold has an exceptionally high stock-to-flow ratio
