More Evidence Precious Metals Mining is Collapsing
More Evidence Precious Metals Mining is Collapsing by Rory for The Daily Coin
For the past year or so we have been discussing in detail how the precious metals mining industry is collapsing. We now even more evidence to support this idea.
Earlier in 2019 we saw, for the first time, mergers by the major gold mining operations, which included a hostile take over of NewMont. Once companies begin merging the industry is in for a grand shake up. We are now seeing the entire industry morph.
It really began 2-3 years ago when we first China move into the mining industry and begin acquiring working mines and then acquiring some developing mines, all of which are outside of China’s borders. This should have sent alarm bells ringing across the land, but was only met with odd curiosity. There have been a couple of great analyst to report on what has been happening but for the most part we have been on the cutting edge of this situation. We now another piece of the puzzle to present.
For a number of years South Africa was the largest gold mining nation in the world and peaked with 11 different major gold mining operations. Today, South Africa is down to three major gold mining operations and at least one of them will be closing down before 2030. The other two may make it as long as 2040 but I wouldn’t count on it. Remember in 4 weeks it will be 2020, so, we are not talking about some far off distant date, we are talking about our lifetime.
Today, South Africa isn’t even counted in the top 5 gold producing nations in the world.
Gold mining happens on every continent except for Antarctica and is extracted from mines of widely varying types and scale. China was the world’s largest gold producer in 2018 and accounted for approximately 12% of total global production, followed by Australia, Russia, the United States and Canada. The world’s gold production affects the price of gold, and like most commodities, the price of gold depends on supply, demand and short-term trading by speculators. Source
That’s a sad statement considering it was the 2nd largest gold producing nation just a few short years ago. My, oh my, how things change.
Not only can we see the shift in mining production move from nation to nation we see the extraction rate has either leveled off or declined from its previous all time output high. We expect to see these numbers continue to slumber and fall over the coming decade with a quicken as we move into the 2030’s. We have already hit “peak gold” and are now moving to the downside of the slope.
Mine production was roughly 3,500 tonnes in 2018, up from 2,400 in 2010. However, despite the increase over this period, gold mining production has not changed significantly since 2016. One reason is that the “easy gold” has already been mined and miners now must dig deeper to access quality gold reserves. This has led to additional problems as miners are exposed to new hazards, and the environmental impact is heightened. In short, it costs more to get less gold. These factors add to the costs of gold mine production, sometimes resulting in higher gold prices.
Some analysts believe that at present extraction rates, South Africa, which is one of the largest gold producers in the world, could run out of accessible gold within 40 years. Other estimates suggest that gold mining could reach the point of being economically unsustainable by 2050 worldwide though new discoveries will likely push that date back somewhat. Source
If gold mining becomes economically unsustainable by 2050 – thirty short years from today – that means the estimates I laid out above – 2040 and beyond – will see a very significant drop in gold mining production. That also means, beginning right now we are going to see even larger declines of gold mining production.
The junior mines that are coming online today that promise 5-8 million ounces are going to be extremely valuable over the coming decade. While these are smaller mines they are becoming giants among the ruble of a collapsing industry. What this means for physical, above ground gold is anyone’s guess, but, like most items of value, the more rare it becomes, the greater value is place upon it. Will we see gold outlawed or will we see a free market for gold develop?
We just reported on November 28, 2019, $4,000 Gold By June 2021 – Somebody Thinks So!
“Still very strong demand coming out of central banks, coming out of regions like China and India,” he said. “It’s getting much tougher to grow reserves. It’s getting much tougher to grow production, not just grow production but grow it in a way that actually improves the underlying quality of the business.”
Even so, “I think that bodes well — even if gold is at $2,000, we’re not going to see a substantial amount of new mine supply because it’s just so difficult,” he said. Source
The outstanding quote by Sean Boyd is – It’s getting much tougher to grow production, not just grow production but grow it in a way that actually improves the underlying quality of the business. That is an amazing piece of information coming from someone who is suppose to be on top of his game, on top of the gold mining industry and speak with an authoritative voice. The quality of the business is not going to improve even though the company adds ounces and production to the bottom line!! WOW! That means the companies will suffer and begin making adjustments to meet obligations to share holders, employees and communities where the mines operate. This can only mean one thing – operations will change dramatically in order to minimize the financial impact of these adjustments.
Mining collapse is not some far off distant situation, it is happening right now. Just as we stated earlier this year when the mergers first began. China is going to continue buying up mines and pushing out any and all Westerners to keep the gold in the East. Now would be a great time to consider reviewing some of the smaller mining operations that are successful and some of the juniors that are in development. These are going to be worth, quiet literally, their weight in gold in the very near future.