How much gold does the average U.S. household own? It is a deceptively simple question that has a very complicated answer. For one thing, there are no reliable statistics surrounding private gold ownership in the U.S. And people certainly aren't going to willingly volunteer this very personal information either. However, I believe this question will become increasingly important as our global monetary system is inevitably reordered in the decades to come.
Before we make an attempt to answer this question of private American gold ownership, let's talk for a moment about the official U.S. government gold reserves. According to the U.S. Treasury Department, the United States currently holds over 8,133 metric tonnes, or 261,498,926 troy ounces, of fine gold at secure facilities around the nation. Over 50% of this stash, approximately 4,583 metric tonnes, is stored at the world famous United States Bullion Depository at Fort Knox, Kentucky, where it is guarded by an active U.S. Army camp.
If these official U.S. gold reserves were distributed evenly across the estimated 125.8 million American households, it would total about 2.08 troy ounces (64.7 grams) of gold per household. Of course, this analysis ignores the rumors that have persistently circulated for many decades that some (or even most) of these official U.S. gold reserves have been leased or sold without public knowledge. These rumors have been stoked, in part, because the U.S. gold reserves at Fort Knox have not been audited since 1953.
Regardless, these really aren't the numbers we're looking for. Instead, we want the average private gold ownership per U.S. household. Or, more specifically, we want the median level of gold ownership per U.S. household.
Conspiracy theories about Fort Knox aside, it is obvious that official government statistics are not going to provide us the information we want in regard to average private U.S. household gold ownership. So I am going to try a different approach here. I am going to use my experience with gold scrapping and cleaning out elderly relatives' homes to make an educated guesstimate about the amount of gold owned by the average U.S. household.
In order to attempt to derive a more meaningful number, I am going to explicitly exclude very wealthy households from my estimate. This demographic is much more likely to own an abnormally large amount of very expensive gold jewelry and gold coins. I will also ignore precious metal stackers and gold-bugs in this analysis; these people will obviously have more gold than the average middle class household. In addition, I will exclude extremely poor households that are likely to possess no precious metals at all, other than perhaps a pair of wedding bands.
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The primary source of U.S. household gold is undoubtedly held in the form of solid karat gold jewelry. Most solid karat gold jewelry ranges from 9 karat gold (37.5% fine) up to 18 karat gold (75% fine). However, most people own a lot less solid karat gold jewelry than you might think.
Most karat gold jewelry is very lightweight; hollow pieces are not uncommon. This is done to keep the weight, and therefore the cost, of the gold jewelry down. So, for example, your average solid karat gold women's ring or wedding band might only weigh between 2 and 5 grams, and contain 1/40 to 1/8 of a troy ounce of fine gold. As you can see, it takes quite a bit of solid karat gold jewelry before you can even accumulate one troy ounce of pure gold.
It is far more common to encounter costume jewelry in the average U.S. household, which I loosely define as gold-filled and gold-plated jewelry. Gold-filled jewelry has a thick layer of karat gold that is mechanically fused to a copper-alloy base. In contrast, gold-plated jewelry is made by electro-depositing a very thin layer of gold directly onto base-metal.
Gold-filled jewelry can often be economically recycled for its gold content, provided it is judiciously mixed with solid karat gold jewelry before being sent to the refinery. However, gold-filled jewelry's fine gold content by weight is between 2.1% and 7.5% - substantially less than even the lowest solid carat gold alloys. Because it is so diluted, it takes a huge amount of gold-filled jewelry to accumulate a significant amount of pure gold.
Gold-plated jewelry is even worse. The thickness of gold electro-plate is typically measured in microns, or 1/1000s of a millimeter. Most gold-plating on jewelry is between 0.1 and 5 microns in thickness. As a result, electro-plated gold jewelry is impossible to economically recycle, rendering it, to the best of my knowledge, the leading cause of permanent gold loss in the world today.
Another major source of gold found in the average U.S. household is gold coins. These are fairly uncommon, but some people have a random gold coin or two tucked away, even if they aren't collectors. These coins usually come in two forms: old circulated gold coins and modern bullion coins.
The first type of gold coin commonly seen in American households is pre-1933 semi-numismatic U.S. gold coins. These were issued by the U.S. government before 1933, when the United States was still on the gold standard. These coins come in denominations from the diminutive $1 gold piece to the gigantic $20 double eagle. Although these coins were fully exchangeable with paper currency before the Great Depression, they tended to see little circulation because they represented such large sums of purchasing power. Apart from collectors, most households that have these coins today inherited them.
Modern gold bullion coins are another type of gold coin frequently encountered. The Canadian, U.S., Mexican, Australian and British mints (among others) began producing these coins in the 1980s. The smaller fractional sizes - 1/4, 1/10 and 1/20 troy ounce coins - have been popular gifts for graduations, holidays and birthdays. As a result, even average people with no interest in gold bullion have sometimes accumulated one or two of these coins.
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The final type of gold commonly found in households is rather unexpected - electronics scrap. Many people don't realize it, but gold is a vital component in almost every high-tech gadget out there! In particular, heavily gold-plated contacts are used in CPUs, RAM sticks and other vital electrical contact points where corrosion resistance is a necessity. Cell phones, desktop and laptop computers, tablets and set-top TV boxes are just some of the electronics that contain gold.
Of course, the only problem is that electronics don't contain very much gold at all. As the price of gold has steadily risen over the last 15 years, hardware manufacturers have gone to great lengths to reduce the amount of gold used in electronics. This makes recovering the gold from computer scrap very difficult. In spite of this, there is a thriving market for electronics scrap on platforms like eBay. The average U.S. household has, in aggregate, only a few hundredths of a gram of gold stored in electronic equipment and computers.
So now it is time for the big reveal. How much gold does the average U.S. household own? In my opinion, a good guess is between 1/3 and 1 troy ounces (10 to 31 grams) of pure gold, plus or minus. Almost all of this gold will be in the form of solid karat gold jewelry and gold coins, with a smattering from gold-filled jewelry and electronics scrap. With gold currently trading at $1,800 per troy ounce, this translates into anywhere from $600 to $1,800 worth of gold, give or take, per household.
There are a few conclusions we can draw from our estimate of average U.S. household gold ownership. First, it is safe to assume that these private gold holdings do not represent a significant addition to most peoples' net worth. Second, we can infer that the silver holdings of most American households are also proportionately low; applying a traditional 15x multiplier to gold holdings probably gives a reasonable estimate of household silver holdings. Third, we can presume that the median U.S. household value of all other tangible assets, like gemstones, antiques and fine art, is also rather small.
These are important findings. A massive dislocation is coming in the paper asset markets, where most Americans currently have the bulk of their (non house) net worth. Hard assets, like precious metals, gemstones, fine art and antiques, can serve as a buffer during this future period of financial chaos. But it doesn't work if you don't own any. Invest accordingly.
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