Gold mining and discovery has peaked last year, according to experts.
‘Peak gold’ is the term used to indicate that the ‘golden years’ of gold mining have been reached. Going forward, in 2016 and beyond, gold mining will become much more expensive, and the number of remaining ounces in the ground is drying up.
Goldman Sachs analyst Eugene King estimates that we have only “20 years of known mineable reserves of gold.”
2016 is the first year after the world has reached its ‘peak gold’ stage.
Frank Holmes predicts that a surge in mergers and acquisitions in the gold mining sector is coming. He believes that, as long as they have reliable output, mid-cap companies could be gobbled up by the Barricks and Newmonts of the world.
A logic consequence of recovering the last known gold is that the gold price would spike to levels only imagined.
Did Gold Production Peak Last Year?
Global gold mining output has been contracting since 2013. According to Goldcorp CEO Chuck Jeannes on The Wall Street Journal, 2016 is the first year into the ‘peak gold’ era as 2015 was the last year that gold was within spitting distance.
“There are just not that many new mines being found and developed”, and “this “very positive” for the gold price going forward”, he said.
This year, second-quarter mine supply was 2% less than the same period in 2015, according to Thomson Reuters GFMS. Analysts now expect global production to fall 3% in 2016, after years of growth.
Moreover, the number of new projects and expansions coming online is decreasing now, as evidenced by the following chart.
Frank Holmes writes in his most recent article:
The truth of the matter is, when it comes to discovering new gold deposits, the low-hanging fruit has likely already been picked. Gone are the days when someone could stumble upon an exposed hunk of gold at the bottom of a riverbed, as James Marshall did in 1848, setting off the California Gold Rush. Every year, the pursuit of gold becomes increasingly more challenging—not to mention more expensive—requiring ever more sophisticated tools and technology, including 3D seismic imaging, direction drilling and airborne gravimetry. (A satisfactory “gold fracking” method, however, seems unlikely to become reality any time soon.)
Compounding the issue is the fact that the number of years between discovery of a new major deposit and production is widening, due to the increase in feasibility assessments, compliance, licenses and more—and that’s all before nugget one can be extracted. The average lead time for gold mines worldwide is close to 20 years, though it can sometimes be more, depending on the jurisdiction. This highlights the need for worldwide policy reform to remove many of the barriers that obstruct responsible mining.