With gold's recent volatility and price drop, we've heard a lot of noise from pundits and analysts. Consequently, this seems like a great time to ask certain basic questions about this oft misunderstood market. For example, just how big is the gold market? Where does gold fit into the modern financial landscape? Why does gold still matter today?

To start, let's consider the size of the global market for gold.

According to the World Gold Council (WGC), at the end of 2014, the total above ground stock of physical gold stood at around 180,000 tons. That's about 5.7 billion ounces. At today's dollar price (a little under $1100 per ounce), that comes to about $6.3 trillion.

It seems like a lot, especially considering gold is one of the rarest elements on earth. We also have to consider that this figure may underestimate the actual supply. People began accumulating gold long before anyone was keeping track. Additionally, as China may well have recently demonstrated, no one really wants to talk too loudly about how much gold they actually own.

Of course, we should only include a portion of that total gold stock as part of the financial market. Jewelry makes up a significant percentage of the total gold stock – close to 50%. However, that figure can also be misleading. In many cultures, such as China and India, gold jewelry often serves the dual purposes of ornamentation and storing wealth.

But even discounting jewelry, the gold investment market is huge. Market capitalization stands around $3 trillion, even by conservative estimates. On top of that, we also must take into account all of the available gold-related financial instruments, including exchange traded funds, futures, derivatives, and OTC markets. The numbers become quite staggering when we take a deeper look into the size and volume of the gold market in its entirety.

Market Breadth

To put the size of the global market for gold into perspective, consider the following graphs.