Film at eleven? All right, I suppose that’s too tongue-in-cheek even for me. Still, this headline (and the article that follows) got me shaking my head:
NASA to voyage to ‘golden asteroid’ worth $10,000 quadrillion this fall
$10,000 quadrillion? $1019? Even in 2023 dollars, that’s a whole lotta bread. But what, precisely, does the assertion mean? How did the writer arrive at it, and what is its practical significance?
Well, it seems 16 Psyche, the asteroid that NASA plans to decorate with its own man-made satellite, is believed to contain a great deal of gold, platinum, and other precious metals. The amounts involved are estimated to dwarf the quantities of those elements Mankind has succeeded in extracting from the Earth’s crust. But somehow, I can’t see that huge dollar figure as meaningful in any sense. Here’s why.
If the $10,000 quadrillion figure were based solely on the quantity of gold believed to be in 16 Psyche, at current market rates that would amount to 5*1015 Troy ounces of gold. In a more comprehensible form, that would be about 1.6*1014 kilograms, or 1.6*1011 metric tons: 160 billion metric tons of gold.
Now for some important comparison figures: In all of history,
- We’ve mined only 3.04 billion metric tons of iron ore.
- We’ve mined only 207 million metric tons of other industrial metals.
- We’ve mined only 209 thousand metric tons of gold.
The price of gold depends almost entirely on its scarcity here on Earth. Yes, it’s also valued for its beauty, and for its uses in engineering. But if the Earthly supply of gold were more than fifty times as large as the supply of iron ore, it would be valued at less than the value of a chunk of iron – far less.
Note that the article cited in the first paragraph has not caused the world price of gold to collapse. It hasn’t even fluttered.
But we’re not done yet. Price is determined by scarcity only when one is speaking of “resources:” i.e., things with which we hope to make or purchase other things, but which are normally not valued by end users for any other reason. For example, I greatly value the plumbing in my house; it provides me with running water on demand. But I would not therefore want to acquire raw iron or raw copper for my own purposes. I value the pipes for their utility, not for the elements from which they’re made.
So the $10,000 quadrillion figure is absurd in more than one way. Not only would gold be nearly valueless if there were that much of it available on Earth; also, it would no longer be honored as a medium of exchange. The current Gross World Product is less than $100 trillion – only 0.002% of that absurd gold valuation. Yet all the gold believed to be in 16 Psyche, if it were brought to Earth, would suffice to purchase nothing. No one would be willing to exchange something people actually want or need for a chunk of gold, any more than one could buy a hamburger for chunk of iron ore.
But top editors allow the creation of pointless “gee whiz” headlines (and equally pointless stories) because they “pull in the eyeballs.” So the practice, like Survivor, America’s Got Talent, and Real Housewives of New Jersey, will continue unabated.