Are We Running Out of Gold?
The comments below are an edited and abridged synopsis of an article by Tom Lewis
The discovery of new gold deposits has been declining, and mining companies are spending more on exploration for new sites. Most new deposits have been small; no high-grade deposits with at least 5 million ounces of gold have been found in a long time.
What little is being extracted is costly to obtain. Many deposits are producing 1.4 grams of gold per ton, as compared to 10 grams in the 1970s.
Mining companies are struggling. Many have merged to offset decreasing profits and declining gold supply. The gold industry has seen a wave of mergers over the past few months as producers battle poor returns and diminishing reserves.
This year, Barrick Gold, the world’s 2nd-largest gold producer, and Newmont Mining agreed on a joint venture instead of Barrick buying Newmont outright. Newmont acquired Goldcorp earlier this year in an effort to develop greater and more economical resources.
The real problem is the gold price. It has been holding at around $1,300 an ounce, down from $1,800 in 2012. However, with peak gold in sight, Lewis anticipates a rising gold price so that more exploration dollars can be allocated.
The amount mining companies have allocated for new explorations has declined from a high of $21 billion in 2012 to $10.1 billion in 2018.
It is anticipated that, globally, economic growth will slow. This could see the gold price climbing to its highest level since 2013.