Gold Production On The Cusp of Peaking
Gold Production On The Cusp of Peaking BY
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TDC Note – We reported earlier this month mining production is collapsing. We first reported on May 8, 2018 that it appeared mining production was in fact in trouble and IS headed south. On May 19,2018 we reported the fact the number of larger discoveries is all but vanished. Today a 5 million ounce project is considered a great gold mine, a few decades ago this would be considered a very small mine. This aspect of mining production is one of the more glaring problems – 10 mines producing 5 million ounces over the life of the mine would be great, if there were 5-10 of these mines discovered every year – that’s not happening.
Gold is valuable because it is a finite resource. What happens when all available gold is mined and processed? There is still abundant gold deep within the earth, but it has not yet been found. Mining companies are unable, to dig deep enough. It is difficult for them to know where to locate this deep gold. All known locations have been depleting for years.
That is the reason mining gold has become more difficult and output is expected to begin decreasing steadily. The precious metal is becoming harder to find.
Most of the world’s gold was mined before the 1848 Gold Rush era. Since 1950, 125,000 tons of gold has been processed, which is approximately two-thirds of all gold ever mined. All of the gold that could be accessed easily has been mined.
Gold cannot be manufactured or created. It can only be mined from the earth’s crust. If we want more gold, companies, and investors will need to begin allocating more capital to exploration companies.
According Eugene King of Goldman Sachs, known mineable gold reserve may be gone in 20 years. The definitive word here is “known.” Gold mining companies are gearing up for a new era of exploration deeper below the surface than ever before. This means these companies will be incurring new costs at the same time their profits are decreasing. That is the reason why so few new mines are being excavated and few new projects are being started.
The earth’s easy-to-find gold has already been found and mined. There will not be another California Gold Rush. The search for new gold becomes increasingly challenging and expensive each year. Outdated equipment and technology need to be replaced.
To add to the problem, the lead time between discovery and production of a new gold deposit is 20 years. Much of this is due to jurisdictional, local policies. Global reforms could remove many of the current obstructions.
Mining companies are looking for new sources while using new technology, but many are folding due to the expense involved. If this trend continues, the finite nature of gold will ensure its price skyrockets.
Gold prices have rallied more than 30 per cent since the lift-off in US interest rates in December.
The current path of monetary and credit expansion is unsustainable and will eventually burst…
— Gold Telegraph (@GoldTelegraph_) May 28, 2018
Ian Telfer,Chairman of Goldcorp., indicates we have reached “peak gold” as he states, “We’ve found it all.” He anticipates future gold production to be lower than in the past. He sees all future gold mining as going as a downhill venture. Mr. Telfer believes there is a good possibility that all major sources of gold have already been found and mined. New grades being extracted are declining in value. He predicts this situation could drive the price of gold up to $1,600 by the end of the year from its current price of around $1,300.