Is The Supply of Gold Depleting?

The comments below are an edited and abridged synopsis of an article by Lawrence Thomas

Demand for gold is increasing, yet new discoveries of the precious metal have not kept pace. Funds for exploration are historically high: $54.3 billion, up 60% over the past 18 years.

Increased spending has not produced many new gold discoveries. During the past decade, 41 discoveries have resulted in only 215.5 million ounces of gold. Even counting recently discovered but unexplored mines, the total available amount of gold is not expected to surpass 363 million ounces over the next 10 years.

Gold discoveries have followed a predictable pattern. Old sectors are being depleted, while active exploration for new discoveries has been slow. The amount of gold has not met expectations and remains far below the 2009 high.

The lack of new discoveries is not because of funding. $54.3 billion has been allocated to exploration in the past decade. Part of the problem is the time span between discovery and production—around 20 years. Unless significant discoveries are made, the amount of gold could decrease in the near future, raising demand for the metal. Scarcity results in higher prices, and the decline in gold makes a price increase almost certain.

Continued gold exploration has become critical. In 2018, Colorado-based Newmont Mining Corp., one of the world’s largest gold explorers, has allocated $1.3 billion to expand its current projects, an increase of $300 million from the previous year.

Much of the available gold in Australia’s northern Goldfield has been depleted, and companies are drilling deeper, hoping for new discoveries as new finds are becoming rarer and more expensive to pursue.