What would the gold price (P) be if all money in the world (MTotal) were replaced by the existing mined gold (Gtotal)?
Mtotal I don’t know but I know the money supply of Norway (MNOR), the GDP of Norway(GDPN) and the GDP of the world (GDPW). If we presume the money supply in the economy is proportional to the GDP the Mtotal is
1) Mtotal=GDPW*MNOR / GDPN
For the new gold price we have
We subsitutes 1 into and get
P= (GDPW*MNOR) / (GDPN*GTOTAL)
The numbers are
GDPW = 74.264.873 million USD ( http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29 )
MNOR = 300.000 million USD ( http://www.ssb.no/m2/tab-03.html )
GDPN = 255.000 million USD ( http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29 )
=> P = 530 USD /g
Current price is 48 USD / g
This indicates that the gold price approximately 10 double following a worldwide legalization of gold.
There is other precious metals like silver. This will drag the gold price down. But given a gold/silver ration of 1/16 the worth of the silver is only 1/5th of the gold.
Then there are other uses for gold like electronics and jewelry. This will drag price up. Overall I believe a 10 doubling is a good estimate.
I am sure the current debt based currencies will end up worthless. This price rice will happen one way or another in the process. The big question is wether the governements will legalize money early and voluntarily or if they will clung to the fiat money to the bitter end plunging the world into a deep economic and social crises. In the first case the value of gold will rice in real terms in the second time it might barely keep it’s value.
But in both cases the precious metals is a safe bet placing parts of your savings.