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This is a question that I sort of view as an intersection between economics/science/space, completely hypothetical in nature, so I'm not sure if this is the right forum for it but, here goes:

I read an article with the headline 'Asteroid passing close to Earth could contain $5.4 trillion of precious metals'. I've seen similar articles talking about the value of metals in asteroids in the past.

My question is, suppose one of these asteroids, on a smaller scale, landed somewhere in the desert, and contained hundreds of billions of dollars worth of precious metals. What would something like that do to the economy? Obviously our money is worth what it is because of the amount of it that is in circulation to some degree, so, if all of a sudden there was an infusion of billions of dollars into the economy (albeit over time), would it have a detrimental impact on the economy? I'm not an economist by any stretch, but in just thinking about it, I've wondered what the effect would be on the economy if suddenly there was hundreds of billions more in precious metals that landed here, not just passing by in space. Would the major impact simply be that the value of those metals would rapidly decrease, or would there be a larger impact on the global economy? Maybe the answer is nobody knows, but theoretically, I've tossed this around in my mind.

This may be a question more suited for an economics forum, and I'll be happy to move it there if so.

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  • $\begingroup$ Would you link to the article please? $\endgroup$ – ViennaCodex May 21 '17 at 20:22
  • $\begingroup$ There's a related novel by Jules Verne, "The Chase of the Golden Meteor", published in 1908. $\endgroup$ – Ginasius May 21 '17 at 20:46
  • $\begingroup$ The market price of a commodity depends on a couple of things: what it takes to bring it market, and how much supply is available relative to demand. A landed asteroid may contain x billions of dollars worth of a given precious metal, but it still has to be extracted and refined to the point it becomes a usable / marketable commodity e.g. gold bullion, and that costs money. Unless the metal of interest is in some way cheaper to extract and refine than what can be found already in the ground, a landed asteroid won't have any economic impact... $\endgroup$ – Anthony X May 21 '17 at 21:50
  • $\begingroup$ The real value of resources in asteroids might be in their availability in space, out of Earth's gravity well. Building things in space which are to be used in space can save the cost of hauling them up from Earth's surface. But, to accomplish this, you have to be able to do everything from extraction to refining to manufacturing all in zero-g, and we have thus far accumulated little to no experience in doing any of it. Until we do, it's all just speculation. $\endgroup$ – Anthony X May 21 '17 at 21:56
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    $\begingroup$ @uhoh Doesn't invalidate my point that a landed asteroid isn't likely to be some sort of cornucopia of resources. Whatever we might find in one we can probably already find somewhere on Earth; extraction from such an asteroid will likely be no less expensive than from an indigenous terrestrial source. The economic value of resources in an asteroid comes only from its availability outside of Earth's gravity well, and is based on the assumption that's where it will be needed. $\endgroup$ – Anthony X May 22 '17 at 2:41
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To the extent that these precious metals have actual value in industrial processes it would be a great day. The cost to make many goods would drop and we all would, to some degree, benefit.

To the extent that these precious metals are being used as monetary instruments (people paying for things in, say, gold), it would reduce the value of those monetary instruments dramatically. For example, there is less than 10 trillion USD of gold that has been mined, so a 5 trillion USD rock sitting on the ground (I know, it won't just be sitting there) would definitely affect the market.

Note: I'm assuming that the "landed" object did so without causing an extinction event -- which I think is your assumption as well.

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    $\begingroup$ I can think of some places on the planet where a sudden, large governmental cash infusion at the moment would not necessarily be considered a great day to surrounding countries, but those are probably special cases. $\endgroup$ – uhoh May 22 '17 at 0:52
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    $\begingroup$ Not cash -- raw materials. $\endgroup$ – Erik May 22 '17 at 1:05
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    $\begingroup$ Despot looks at newly found asteroid with precious metals, thinks "Yippee! Brushless DC motors and iPhones for everyone!" or "How much can I get for this thing?" I like your answer, just commenting that "great day" is in the "eye of the beholder" category. $\endgroup$ – uhoh May 22 '17 at 1:59
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As has been mentioned, it would be much more valuable in Earth or Luna orbit since it would be a lot of resources that we don't have to lift out of the gravity well.

On the ground, it would all depend on how much there is. 100 pounds of gold, while awesome, will not have much effect on world economy past a short dip in gold prices (which are currently being artificially depressed anyway).

Also remember that the more resources in the payload you are dropping on the Earth, the bigger the boom when it hits. It might be a windfall but not for those nearby. If it is big enough, we might have to ask that question to whatever evolves intelligence after the extinction event.

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It wouldn't have a lot of effect on currencies, no modern currency is backed by precious metals. If it had a lot of the platinide group of metals, it would definitely benefit industry, since they are used for catalysts in a lot of chemical processes. If it was mostly gold and silver it might drop the price of them for a while, but it would have to have quite a bit to make anything more than short term changes. The total value of the world's assets is about 256 trillion, so that asteroid isn't a big deal by comparison.

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That's a good question once expanded to the idea that once we start farming them and towing them to near earth orbit, who is accountable if an asteroid strikes ground and brings more worth in raw materials than GDP of the destroyed area? Also when the question of whose asteroid is it?

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My question is, suppose one of these asteroids, on a smaller scale, landed somewhere in the desert, and contained hundreds of billions of dollars worth of precious metals. What would something like that do to the economy?

It has already happened, many times over, but about 4 billion years ago, during the late heavy bombardment. Almost all of the gold and platinum we mine today results from asteroids that hit the Earth after its surface had cooled. This was not a good time for planet Earth.

A half-kilometer asteroid hitting the Earth today also would not be a good time for planet Earth. A bit over 3 years ago, a mere 18 meter diameter asteroid exploded over Chelyabinsk, Russia, releasing the equivalent of about 30 Hiroshima bombs of energy in the process. A half-kilometer diameter asteroid would release the equivalent of a half a million to over a million Hiroshima bombs worth of energy. Needless to say, this would not be a good day for humanity.

As an aside, that 5.4 trillion dollars is a gross over-exaggeration. A more likely number is 300 billion. Or less. An even more likely number: The value of the precious metals in asteroids is currently negative, and most likely will remain so for a good long time. To quote Chris Lewicki, the president and chief engineer of asteroid mining company Planetary Resources,

“We are only repeating what has been done throughout history, just in a new environment.”

Source: The truth about asteroid mining, which did not tell the truth about asteroid mining.

In other words, they're lying. Selling snake oil. Without unobtainium, the numbers just do not add up. What might add up, assuming a nascent industry in space, is mining asteroids for non-precious resources such as water and methane. Most deep pocket investors cannot comprehend how water and methane could possibly be more precious than gold or platinum, so the snake oil salesmen lie to those potential investors about the presence of “gold in them thar asteroids.”

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