How fast does the available amount of gold in the world increase due to mining?
For the last few years around 2,500 metric tonnes of gold have been produced each year.  This is on top of existing supply of 160,000 metric tonnes.  Existing yearly production is around 1.5% of the existing supply. Charts from here. If that fraction is really small, then the amount of gold can be thought of as relatively constant. That fraction is very small. After all, people have been mining gold for thousands of years. So the cumulative results of gold mining have been building up the supply for quite some time. Meanwhile, owners of gold rarely destroy it. A little bit of gold is used in some industries as a consumable. This limited consumption of gold offsets some of the production that comes from mining. But truthfully this effect is minuscule. For the most part people either hoard it like its made of gold, or sell it (after all it is worth its weight in gold). If you're interested Wikipedia lists a few more factors that affect gold prices. (If you're not interested Wikipedia lists them anyway.) Approximately 5.3 billion ounces have been mined. This puts the total value of all gold in the world at about $9.5 trillion, based on $1800/oz. Total world net worth was $125T in 2006. There's an odd thing that happens when one asset's value is suddenly such a large percent of all assets. (This reminds me of how and why the tech bubble burst. Cisco and EMC would have been worth more than all other stocks combined if they grew in the 00's like they did in the 90's.) Production (in 2005/6) ran about 80 million oz/yr. Just over 1.5% impact to total supply, so you are right in that observation.  On the other hand, the limited amount out here, means that if everyone decided to put their wealth in gold, it would be done by driving the price to bubblicious levels.  One can study this all day, and parse out how much is in investment form (as compared to jewelry, etc) and realize that a few trillion dollars in value pales in comparison to the wealth of the US alone, let alone the world. Half the world can't buy two oz if they tried.  Of course there's pressure to reopen mines that had costs pushing $800/oz. Understand that the supply of $300 gold is long gone. As the easy gold has been mined, and cost goes up, there's a point where mines close. But as the price of gold trades at these levels, the mines that couldn't produce at $600 are now opening.
Your quote: There's about 10 trillion in gold  and about 2.8 trillion of US cash  in the world. Neither of these is anywhere large enough to be used for all the transactions in the world.  So how was it commercial banks could lend like crazy for home mortgages??  M1 remaind constant throughout the decade and years , if frac multiplier effect was the cause for m2, why wasn't it until the 2000s that m2 became exponential?   Commercial Banks able to create credit and lend out of thin air to customers thanks to deregulation that caused m2 to explode.  They didn't need no FED.  They didin't need no reserves.  They were able to act regardless of the FED.  The FED responded to them, instead of the other way around.    Before deregulation banks didn't bother creating too much credit loans coz it was too dangerous, they were mostly utilty banks.   After deregulation, creation of exotic derivatives, low interest rates, and high speed internet globalized digital trading,  they went crazy creating credit out of thin air coz it wasn't dangerous because they could sell the home loans. Mining/discovery of gold can be inflationary -- the Spanish looting of Central America for a few hundred years or the gold rush in the 19th century US are examples of that phenomenon. The difference between printing currency and mining is that you have to ability to print money on demand, while mining is limited to whatever is available to extract at a given time. The rising price of gold may be contributing to increased production, as low-grade ore that wasn't economically viable to work with in the 1980's are now affordable. @Michael Kjörling answered why platinum is in demand like it is.  But it missed some of the significant risks so I will address some of them.  Platinum is much more rare than gold.  But not because there is less platinum than gold just that the known existing platinum veins are smaller and more disbursed.  So if a large vein were found it could have a significant impact on the availability and thus reducing price of platinum.  New mining technologies are being developed every day.  One of these could make exacting platinum from existing not platinum mines easier and more cost effective again increasing the availability and reducing the price of platinum. The vast majority of platinum use today is for emissions controls.  There is a lot of money being thrown into research on green energy and technologies.  One of these technologies or a side effect of other research could result in much more cost effective ways to combat emissions.  Should that happen I would expect the price of platinum to fall through the floor and potentially never recover. I do not think any of these scenarios are imminent. But the risks that they present are so great it is important to consider them before investing. No, it doesn't matter how powerful the machines are that do the mining. The system balances it out (increases the difficulty) so that one block is mined every 10 minutes, regardless of whether there's 500 miners in the world or 50 million, it will always be around 10 minutes (sometimes 9 and sometimes 11 though). And one block used to be 50BTC, but every 4 years this halves and so in 100 years the supply increase will be almost 0, miners will still get the transaction fees though.   This means bitcoin is limited to a supply of less than 21 million. Which creates the scarcity.  There's possibly a problem though. Quantum computing might not increase the supply but it could potentially decrypt the encryption, but if that happens the whole internet and digital world will be in trouble and not just bitcoin. blockchain.info has all the most recent stats.  264,360 bitcoins traded in the last 24 hours.  About [16.5 Million](http://moderninvestor.io/how-many-bitcoins-have-been-mined/) exist right now.    Here is how they make more bitcoins   &gt;12.5 [bitcoins per block](https://en.wikipedia.org/wiki/Bitcoin) (approximately every ten minutes) until mid 2020,[7] and then afterwards 6.25 bitcoins per block for 4 years until next halving. This halving continues until 2110–40, when 21 million bitcoins will have been issued.  None of that is really making the price going up.  There is not a shortage of bitcoins.  There are just more people wanting to buy bitcoin right now then there are people who want to sale.  So on the exchanges people keep offering to buy at a higher and higher price.  Competing with each other causing the price to go up.    It'll probably hit a peak and drop back down to 4k or so.  That seems to be the trend with bitcoin.  Climb real high, dip down to about halfway up that climb, level off, time goes by, peak again.  Repeat. Gold is a commodity.  It has a tracked price and can be bought and sold as such.  In its physical form it represents something real of signifigant value that can be traded for currency or barted.  A single pound of gold is worth about 27000 dollars. It is very valuable and it is easily transported as opposed to a car which loses value while you transport it.  There are other metals that also hold value (Platinum, Silver, Copper, etc) as well as other commodities.  Platinum has a higher Value to weight ratio than gold but there is less of a global quantity and the demand is not as high.  A gold mine is an investement where you hope to take out more in gold than it cost to get it out.   Just like any other business.  High gold prices simply lower your break even point. TIPS protects you from inflation but does not protect you from devaluation.  It also only pays the inflation rate recoginized by the Treasury.  There are experts who believe that the fed has understated inflation.  If these are correct then TIPS is not protecting its investors from inflation as promised.   You can also think of treasury bonds as an investment in your government.  Your return will be effectively determined by how they run their business of governing.  If you believe that the government is doing the right things to help promote the economy then investing in their bonds will help them to be able to continue to do so.  And if consumers buy the bonds then the treasury does not have to buy any more of its own. "Gold has very useful physical properties for some engineering applications.  Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold.  For example: Gold can be ""beaten"" or electroplated to produce very thin shiny coatings.  Entire roofs (of famous buildings) have been covered with ""gold leaf"", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel.  Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire." The continent of Africa has lots of natural resources, but did not fare as well as the USA, so that alone doesn't explain everything. However, there was mass migration from the old world to the new world for the entire US history.  88 people control more wealth than the poorest half of the world (3.6B people or whatever). That is a relatively meaningless statistic, alone.  Thanks to automation and globalization, intellectual property, and access to capital, I see the trend continuing until 9 people control 99.9999999% of the world's wealth.  I may look up Ricardian theory. First is storage which is a big and a detrimental headache. Security is another big headache. Investing in precious metal has always been an investment opportunity in the countries in the east i.e. India and China because of cultural reason and due to absence of investment opportunities for the less fortunate ones. It isn't the case so in the West. Secondly what is the right an opportune moment is open to question. When the worlwide economy is up and running, that is probably the time to buy i.e. people would like to put money in use rather than store. The saying goes the other way when the economy is stagnating. Then there is also the case of waiting out the bad periods to sell your gold and silver. If you do want to buy precious metals then use a service like BullionVault, rather than doing those yourself. It takes care of the 2 big headaches, I mentioned earlier. "It's not clear that anything needs to go up if gold goes down. In a bubble, asset prices can just collapse, without some other asset increasing to compensate. Economies are not a zero-sum game. On the other hand, gold may fall when people decide they don't need to hoard some store of value that, to their minds, never changes. It could very well indicate that there is more confidence in the broader economy.  I am not a gold bug, so I don't much see the point in ""investing"" in something that is non-productive and also inedible, but to each his own." Some countries are considering stocking up on gold to shore up their notes.  (Or so I heard)  If this happens, gold will obviously become more rare.  The price will then be valued not only by the buying and selling of it but also by the forced rarity of it. Since 2007 the world has seen a period of striking economic and financial volatility featuring the deepest recession since the 1930s despite this gold has performed strongly with its price roughly doubling since the global financial crisis began in mid-2007. 1. Gold and real interest rates: One of the factor that influences gold prices is real interest rate which is to some extent related to inflation. Since gold lacks a yield of its own, the opportunity cost of holding gold increases with a real interest rate increase and decreases with a fall in real interest rates. 2. Gold and the US dollar: The external value of the US dollar has been a significant influence on short-term gold price movements. The IMF estimated6 in 2008 that 40-50% of the moves in the gold price   since 2002 were dollar-related, with a 1% change in the effective   external value of the dollar leading to a more than 1% change in the   gold price (Source).  3. Gold and financial stress: It is a significant and commonly observed influence on the short-term price of gold. In periods of financial stress gold demand may rise for a number of   reasons:  4. Gold and political instability: It is another factor that can boost gold prices. Investor concerns about wars, civil conflicts and international   tensions can boost demand for gold for similar reasons to those noted   above for periods of financial stress. Gold‟s potential function as a   „currency of last resort‟ in case of serious system collapse provides   a particular incentive to hold it in case the political situation is   especially severe. (Source) 5. Gold and official sector activity: The behaviour of central banks and other parts of the official sector can have an important impact on gold prices.  One reason for this is that central banks are big holders of gold,   possessing some 30,500 metric tons in 2010, which is approximately 15%   of all above-ground gold stocks. As a result, central bank policies on   gold sales and purchases can have significant effects, and these   policies have been subject to considerable shifts over the decades. (Source)   (Source of above graphs) "Platinum use is pretty heavily overweight in industrial areas; according to the linked Wikipedia article, 239 tonnes of platinum was sold in 2006, of which 130 tonnes went to vehicles emissions control devices and another 13.3 tonnes to electronics. Gold sees substantial use as an investment as well as to hedge against economical decline and inflation, with comparatively little industrial (""real world"", as some put it) use. That is their principal difference from an investment point of view. According to Wikipedia's article on platinum, ... during periods of economic uncertainty, the price of platinum tends to decrease due to reduced industrial demand, falling below the price of gold. Gold prices are more stable in slow economic times, as gold is considered a safe haven and gold demand is not driven by industrial uses. If your investment scenario is a tanking world economy, for reason of its large industrial usage, I for one would not count on platinum to not fall in price. Of course gold may fall in price as well, but since it is not primarily an industrial use commodity, I would personally expect gold to do better in such a scenario." Technically, you could improve your odds in this hypothetical pre-apocolyptic economy by diversifying your digital and tangible precious-metal-commodity portfolio by going in with gold, silver, platinum, palladium, and others.   That being said I'm not sure if one can access tangible stores of all these metals... The points given by DumbCoder are very valid. Diversifying portfolio is always a good idea. Including Metals is also a good idea. Investing in single metal though may not be a good idea.   •Silver is pretty cheap now, hopefully it will be for a while. •Silver is undervalued compared to gold. World reserve ratio is around 1 to 11, while price is around 1 to 60. Both the above are iffy statements. Cheap is relative term ... there are quite a few metals more cheaper than Silver [Copper for example]. Undervalued doesn't make sense. Its a quesiton of demand and supply. Today Industrial use of Silver is more widespread, and its predecting future what would happen. If you are saying Silver will appreciate more than other metals, it again depends on country and time period. There are times when even metals like Copper have given more returns than Silver and Gold. There is also Platinum to consider. In my opinion quite a bit of stuff is put in undervalued ... i.e. comparing reserve ratio to price in absolute isn't right comparing it over relative years is right. What the ratio says is for every 11 gms of silver, there is 1 gm of Gold and the price of this 1 gm is 60 times more than silver. True. And nobody tell is the demand of Silver 60 times more than Gold or 11 times more than Gold. i.e. the consumption. What is also not told is the cost to extract the 11 gms of silver is less than cost of 1 gm of Gold. So the cheapness you are thinking is  not 100% true.