‘Peak Gold’ Scarcity Could Drive Gold Value above $1,600

The comments below are an edited and abridged synopsis of an article by Peter Reagan

Gold is a finite resource, and most of the available gold was initially deposited in the earth’s mantle. But mining companies can’t mine there. They can only determine the probability that gold mineral deposits will be close to the earth’s surface, which is why they sometimes come up short.

A high percentage of gold was mined during the 1848 Gold Rush. Just over 125,000 tons have been mined since 1950, so we aren’t out of gold, and likely won’t be for quite some time. But the economically viable gold supply for mining companies might be at its peak. The rest may be too expensive to mine.

Mining companies are looking for new sources of gold, with the technology to mine it more efficiently, but if the supply of gold isn’t where it can profitably be mined, then mining activity will drop and gold prices will rise due to supply changes.

This is why Ian Telfer, Chairman of Goldcorp, thinks we’ve reached peak gold. He believes 2018 could be the beginning of a gold mining drought that will drive gold past $1,600 per ounce.

With the lack of media attention, peak gold could be the most under-reported economic story of 2018. But don’t let that stop you from getting prepared.

A spike in gold exploration spending between 2006 and 2008 created the conditions for mining companies to boost production over the last decade. But we’ve reached peak production and are headed downward. With supply down, the gold price will likely be on the rise.

A strategist at Bank of America says gold may be headed for $1,450 per ounce. Now, the chairman of Goldcorp is saying $1,600 per ounce.

Whatever prediction plays out, gold is sitting pretty. It’s best to get ahead of the crowd before everyone starts scrambling for gold.