What would happen to the world if suddenly gold became worthless?

It is estimated that all the gold ever mined has a value of $10T as of 2011. [1] Let's assume that all of that gold continues to exist in some form; either as official gold reserves, as people's jewelry or as gold coins stashed under the bed.

If the value of gold went to zero overnight, $10T in wealth held across the globe would disappear overnight.  But that represents only 14% of the world's 2011 GDP. [2] So in the grand scheme of things, it isn't quite the end of the world if the shiny metal that's been held in such value through human history simply lost all value. Just a 14% loss in one year's worth of global economic output.

However, that loss will not be felt equally across the world as most of the wealth in the developed world is not held in gold.  It exists in fiat currency or in the capital markets as equities and debt instruments.  Our net worth in the West rests on an abstraction - a number on a screen backed up by some mainframe sitting in a bunker somewhere.

The people that will most acutely feel the pain are those in the developing countries where gold represents the family saving.  For them, it would be the most cruel trick