I saw the Hobbit and the movie got me thinking about gold. In case you are not familiar with the story, a race of dwarves live in a mountain and acquire vast quantities of gold which attracts a ferocious dragon-Smaug- who ousts the dwarves and takes the gold for himself.
Now I was thinking: what if we Americans counted our wealth in gold? What I mean is what if we all cashed out tax free our houses, stocks, bonds, the lot and just had piles of gold in front of us like some giant kitchen table poker game. What would it look like?
Well, the last gold currency the U.S. used was the 1 ounce Double Eagle last issued in 1933. For my purpose, the Double Eagle is a great coin: it is nearly the same size as the Kennedy half dollar coin and an ounce of gold is worth roughly $2000 ($1910 on 8/23/11).
So, if we all cashed out, the poorest 20% of Americans would owe about 27 coins. They’re broke; they’re underwater. The next 20% would have 3 gold coins. The middle 20% of Americans would have a pile of about 33 gold coins. Stacked, their coins are about 2 1/2 inches tall. The next 20% of Americans would have a 104 gold coins. Their stack would be a little over 8 inches. The proportions of coins for the least wealthy 80% of Americans sounds like a friendly poker game- some are winning and some are losing and some owe the kitty.
The wealth of the next 19% of Americans is a slightly different picture. Moving from the bottom up, the next 10% would have about 240 gold coins. The next 5 %, 454 coins and the final 4%, before we get to the top one percent, would have 1367 coins or 85 pounds of gold: about the weight of a healthy third grade boy. So, that’s our poorest 99%.
For the top 1%, we are going to need a much stronger table. As a whole their average is just shy of 7000 gold coins-437 pounds. But even among the wealthy there are big differences of wealth. The top .01% would have about 50,000 gold coins each or about 3125 pounds of gold-a car. Now, that’s a lot of gold, but it’s not hoarding dragon amounts of gold. For that you need to look at the wealth of the 400 richest Americans with their 2.1 million 1 ounce gold coins or 131,250 pounds of gold- a M1 Abrams tank. And finally we have the richest American, Bill Gates, with 32.5 million gold coins or about 2 millions pounds, or if you prefer the weight of two 747’s. Now, that’s enough gold to interest even Smaug.