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Peak Gold

January 4, 2022

Peak Gold

Preface.  Both articles below offer the usual techno-optimism of more gold supplies from Man’s Cleverness: robots, AI, and Big and Smart Data Mining.

But both are energy blind. Ores are decreasing in gold concentrations, and found in deeper and more remote places, requiring more energy to process.  Where will this energy come from?

Conventional crude oil production leveled off in 2005, and it appears to have peaked in 2008 at 69.5 million barrels per day (mb/d) according to Europe’s International Energy Agency (IEA 2018 p45). The U.S. Energy Information Agency shows global peak crude oil production at a later date in 2018 at 82.9 mb/d (EIA 2020) because they included tight oil, oil sands, and deep-sea oil.  World coal may have peaked in 2013.

So where’s the energy to mine, transport ore, smelt it, and distribute the gold?

***

Harper J (2020) How much gold is there left to mine in the world? BBC.

Discoveries of large deposits are becoming increasingly rare, experts say. As a result, most gold production currently comes from older mines that have been in use for decades. There are relatively few unexplored regions left for gold-mining, although possibly the most promising are in some of the more unstable parts of the world, such as in West Africa.

Gold is a finite resource, and there will eventually come a stage when there is none left to be mined. Some believe we may have already reached that point. Gold mine production totaled 3,531 tonnes in 2019, 1% lower than in 2018, according to the World Gold Council. This is the first annual decline in production since 2008.

The below-ground stock of gold reserves is currently estimated to be around 50,000 tonnes, according to the US Geological Survey. To put that in perspective, around 190,000 tonnes of gold has been mined in total.

…click on the above link to read the rest of the article…

Another Billionaire Warns “We’re Running Out Of Gold”

July 13, 2018

Another Billionaire Warns “We’re Running Out Of Gold”

Simply put, mining companies are no longer finding vast, new deposits of gold to replace their aging mines.

I quoted Pierre Lassonde, the billionaire founder of gold royalty giant Franco-Nevada and former head of Newmont Mining:

If you look back to the 70s, 80s and 90s, in every one of those decades, the industry found at least one 50+ million-ounce gold deposit, at least ten 30+ million-ounce deposits, and countless 5 to 10 million ounce deposits.

But if you look at the last 15 years, we found no 50-million-ounce deposit, no 30-million-ounce deposit and only very few 15 million ounce deposits.

Pierre Lassonde is one of the most well-respected and knowledgeable mining experts in the world. And he thinks we’re reaching ‘peak gold’.

But, as Simon reports today, he’s not alone.

Last month, Rudy Fronk, Chairman and CEO of Seabridge Gold noted:

“Peak gold is the new reality in the gold business with reserves now being mined much faster than they are being replaced.”

Nick Holland, CEO of South Africa’s largest gold producer Gold Fields:

“We were all talking about how production was going to increase every year. I think those days are probably gone.”

Kevin Dushnisky, President of mining giant Barrick Gold:

“Falling grades and production levels, a lack of new discoveries, and extended project development timelines are bullish for the medium and long-term gold price outlook.”

But the biggest warning comes from resource legend Ian Telfer, chairman of Goldcorp. In an interview with Financial Post, Telfer said:

“If I could give one sentence about the gold mining business… it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years.

Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down… We’re right at peak gold here.”

…click on the above link to read the rest of the article…

Gold Production On The Cusp of Peaking

May 30, 2018

Gold Production On The Cusp of Peaking

28
May

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.

…click on the above link to read the rest of the article…

Peak Gold? No: Peak Gold Production? Perhaps

March 21, 2018

Some claim we have reached peak gold. It depends on what one means by the term. Perhaps we have reached peak production.

Last September, Bloomberg reported We’re Reaching Peak Gold.

The world may have already produced the most gold in a year it ever will, according to the chairman of the World Gold Council.

Production is likely to plateau at best, before slowly declining as demand rises, especially given global political risks and robust purchases by consumers in India and China, Randall Oliphant said in an interview Monday.

“It’s not clear how the whole U.S. political system will play out,” said Oliphant, an industry veteran who’s been an executive at some of the world’s biggest gold miners. “All this uncertainty seems very fertile ground for people to get into gold.”

“We’re not going to fall off a cliff in the near term, but in the same time it’s really hard to see how we’re going to produce enough gold to meet all this demand,” Oliphant said.

Meeting Demand

The last statement by Oliphant, the chairman of the World Gold Conference is absurd.

There is ample gold to meet demand. Unlike energy or silver, gold is not used up.

Nearly every ounce of gold ever mined is still in existence. The exchanges would not run out of gold even if production fell to zero tomorrow and stayed that way for the next decade.

What’s the Real Long-Term Driver for Gold?

Most analysts are totally clueless about gold and gold markets. They cite jewelry, mining production, central bank sales, and all sorts of other irrelevant factors in their analysis.

If you really want to understand what gold is all about, I suggest you read an interview on Gold Switzerland with Robert Blumen: “What’s really key for the price formation of gold?”

Blumen discusses assets vs. consumption, mine supply, jewelry, marginal demand, the alleged (and nonexistent “gold deficit”), and sentiment.

…click on the above link to read the rest of the article…

Peak Gold Has Arrived

March 15, 2018

Peak Gold Has Arrived

Following the recent market crash, investors lost $5.2 trillion worldwide before the market managed to recover most of the losses. There are hints that certain bubbles are ready to burst as the worlds biggest hedge fund positions accordingly.

In addition to the stock market, the global gold supply is weakening, leaving investors anticipating higher prices. In 2017, the gold supply plummeted the most since any year since 2008. If the supply of gold is really plateauing, experts are predicting a “peak gold” period.

China, the world larger miner of gold, produced 453 tons of the metal in 2016. In 2017, China’s production fell by 9 percent. If production of gold continues to fall, a rise in global demand is a certainty. The demand will come from investors and centrals banks unwilling to rely on the dubious strength of the US dollar.

Chinese is enjoying a boon economy, and the newly rich who can afford it are looking to buy physical gold in an effort to protect their wealth. China supplies its gold only domestically and does not export the metal. If China’s domestic gold supply is depleting, it will certain seek to buy gold elsewhere. Part of Chinese economic plan is to potentially reduce the global dominance of the dollar with the yuan.

The US dollar has dominated the global currency market for over 40 years. China, and Russia are actively increasing their gold reserves, which could lead to both economic and political uncertainties as more countries begin to dump US Treasuries. Both Russia and China are planning to use gold-backed currency as payment when trading with each other. This makes gold a critical commodity for both countries.

China might import gold to meet its own demand. But the available supply of gold is finite. During the past 15 years, global gold deposits have become depleted, and replacement deposits are becoming rarer each year.

…click on the above link to read the rest of the article…

Peak Gold: Global Gold Supply Flat In 2017 As China Output Falls By 9%

February 8, 2018

Peak Gold: Global Gold Supply Flat In 2017 As China Output Falls By 9%

– China gold production falls by 9% to 420.5t in 2017
– Chinese gold demand rose 4% to 953.3t in same period
– China is largest producer and accounts for 15% of global gold production
– China does not export gold. Increasing foreign gold acquisitions to meet demand
– Global gold production flat – 3,269t in ’17 from 3,263t in ’16, smallest increase since ’08
– Peak Gold is here: supply set to fall gradually while global demand remains robust

Financial markets are abuzz with how much money the global economy lost earlier this week when the Dow Jones Index had a bit of a crash – ahem – ‘correction’. Luckily it has (temporarily at least) recovered but there are many other threats to financial markets in 2018 that suggest the ‘Everything Bubble’ is set to burst.

There is also an unappreciated threat to the gold market and more particularly a threat to gold mining supply and therefore the likelihood of higher gold prices – that is the threat of ‘peak gold’.

The supply of gold increased last year by the smallest margin since 2008. Ourselves and other market experts who have looked at the data, have been contending for many months now that we are on the cusp of ‘peak gold’.

The FT has now recognised the phenomenon of peak gold or ‘plateau gold’ and covered it this week: Global gold mine supply plateaued in 2017 as China output fell 9%.

China is the world’s largest gold supplier. In 2016 the country produced 453t or 56% more than the second highest gold producing nation of Australia.In 2017 Chinese production fell 9% to just 420.5t.

It also leads global gold demand. The demand comes from not only individuals but also a central bank that is determined to no longer rely on the US dollar.

…click on the above link to read the rest of the article…

US: Five Must Gold See Charts – Gold Miners Are “Running Out” of Gold

December 24, 2016

US: Five Must Gold See Charts – Gold Miners Are “Running Out” of Gold

Gold Mining Companies Are Running Out of Gold: Five Must See Charts

  • ‘Peak gold’ – World’s gold production to peak in 2019 and decline
  • Gold found by miners has plunged 85% over past decade
  • Gold mining CEOs turning to deals to combat dwindling reserves
  • Exploration more difficult and firms have cut capex

The reality of peak gold production has recently been acknowledged by Bloomberg and some of the financial media. Yet the mainstream, non specialist financial media has yet to cover this important topic with obvious ramifications for the gold market and the gold price in the medium and long term.

Peak gold production is happening globally which is very positive for gold and gold mining shares. Bloomberg have again covered this important fundamental factor in the market and have done so with an article and five must see gold charts:

“Gold’s had a roller-coaster year, surging as much as 30 percent before giving up the bulk of those gains. But one trend has been consistent: mining companies are finding it harder to dig up more of the precious metal.

The following charts show why, and what that means for the industry:”


…click on the above link to read the rest of the article…

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