Monday, August 1, 2016

Gold supplies declining as the cost to mine the metal continues to increase nine years after reaching Peak Gold

It was determined back in 2007 that the world had reached the point of Peak Gold, which means that the majority of easily accessible metal had already extracted from the earth and that going forward, mining costs would invariably increase just to be able to get smaller and small amounts from new gold discoveries.

Eight years later, analysts are now predicting that the industry has reached a new plateau of Peak Gold Production, and that supplies to the market will continue to decrease as well, leading to a drive up in price as demand remains steady and supplies dwindle.

This year gold has traded so strongly with the jitters in other markets that it’s easy to forget its own fundamentals. 
And that might be a mistake. Because they are looking interesting. 
Discoveries peaked in 2007 and production will shortly do the same, according to Canadian investment firm Sprott Asset Management. New finds have collapsed between then and now, but not for want of looking. Indeed, “exploration budgets rose 250% from 2009 to 2012,” Sprott’s gold team wrote in a recent note. 
It looks as though 2015 may be the peak year of global production – about 95 million ounces. On an annualised basis, the decline would be about 2.2% a year out to 2024 it said. 
This will be supportive of gold prices, which are already up more than 24% this year. But it also looks interesting for miners. It is likely that there will be a “significant wave of M&A (mergers and acquisitions) within the industry” because “companies need to replace both reserve and production ounces”. - News Markets
As the economy and banking systems tread water in their reliance for continuous quantitative easing and negative interest rates, more and more people who have discounted gold for many years will one change their tune and seek the security of wealth protection that only gold can provide.  And when that day soon comes, the problem that will hang over them is not if they can afford the price of buying the metal, but will there be any metal available to them when the flood gates open from the rise in consumer demands.


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