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Peak Gold and the Coming Supply Crunch

Business

During the lackluster and otherwise unremarkable trading of 2018, a hugely important development took place in the precious metals markets. Gold production, in the estimation of some top industry insiders, peaked.
Peak gold represents the point at which the total number of ounces being pulled out of the ground by miners reaches a maximum.

It doesn’t necessarily mean gold production will suffer a precipitous fall. But it does mean the mining industry lacks the capacity to ramp up production in order to meet rising global demand and even higher prices would not make it happen.
One of the leading proponents of the peak gold thesis is Ian Telfer, chairman of Goldcorp (which was recently acquired by Newmont Mining to become the world’s biggest gold company).

Telfer remarked in 2018, “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.”
We’ll soon find out whether his call for gold production to fall in 2019 pans out. If it does, the implications for precious metals investors are enormous.

The concept of peak gold is controversial, to be sure.

Skeptics point to the thwarting of peak oil over the past decade. Just as technological breakthroughs in fracking and horizontal drilling caused an unexpected surge in crude oil supplies, could not advances in gold mining techniques also lead to an unforeseen supply surge?

When human ingenuity combines with the right market incentives, nothing can be ruled out. But unlike crude oil which is a byproduct of decayed living organisms and exists in various grades all over the world, gold is a basic element that came to us from exploding stars billions of years ago.

Top 5 Miners

The amount of gold in earth’s crust is fixed. By contrast, oil and other hydrocarbons can be produced synthetically from renewable biomass.

Perhaps one day we’ll mine for gold in space or generate it in nuclear reactors or particle accelerators. Theoretically, it’s possible. Practically, there’s no prospect of these unconventional methods of boosting earth’s gold reserves becoming economically viable in our lifetimes. It would take a true “moon shot” in the gold price and/or a technological breakthrough that might be decades away from coming to fruition.

In the meantime, the gold mining industry is experiencing a major wave of consolidation.
Last year Barrick Gold and Randgold merged. This year Newmont Mining acquired Goldcorp. Many lesser known junior mining and exploration companies have been or may soon be gobbled up by senior producers looking for an economical way to grow their reserves.

Developing new mines is expensive, time consuming, and risky.

It’s difficult these days for the majors to even identify viable new projects that would add significantly to their asset base. As new discoveries shrink, many have decided it makes more sense to buy up the assets of smaller competitors while they are on sale.

It may prove beneficial to corporate bottom lines, but M&A activity doesn’t necessarily translate into more ounces being pulled out of the ground on an industry-wide basis. To the contrary, it’s a sign that mining companies aren’t keen on investing in the exploration and development of new mines.

After years of “high grading” – processing the easier to get, higher quality deposits first – future gold extraction costs could get progressively steeper for existing major mines.

Even at $1,300 an ounce, gold prices aren’t high enough to generate attractive returns on investment. Many gold mining companies are barely breaking even after their all-in costs are considered.

Canadian mid-tier producer Iamgold announced recently that it will halt construction at one of its gold projects in Ontario. Iamgold CEO Stephen J.J. Letwin said the company will “wait for improved, and sustainable, market conditions in order to proceed with construction.”

That’s just one example among many of why gold production could begin to taper off and decline overall in 2019.

Refinitiv GFMS analysts forecast gold mining output will decrease slightly this year – from approximately 3,282 tonnes in 2018 to 3,266 tonnes.

The expected fall-off may not be huge, but the wider impact on the precious metals markets very likely will be. With central bank buying continuing to be robust, jewelry demand in India back on the upswing, and investor interest returning amidst volatile financial markets, a slight decrease in production relative to rising demand — sets the stage for a rip-roaring secular bull market.

fxstreet



80 Comments on "Peak Gold and the Coming Supply Crunch"

  1. Davy on Fri, 1st Feb 2019 7:56 pm 

    “More insults and put downs from the board’s bully. You know you can’t win that argument, Davy, so you resort to ad hominem attacks against Mak as usual. Every single time you do that, Mak wins the argument.”

    Are you on drugs are just going through a bipolar mania?

  2. JuanP on Fri, 1st Feb 2019 7:57 pm 

    Davy ““So, you just admitted to engaging in identity theft proving me right. Thank you, Davy!”
    You stupid fuck it is pretty obvious that after you do it for hours and hours I am going to do it back. WTF planet do you come from?”

    Another admission from Davy that he engages in identity theft proving me correct yet again. And, more false accusations that I do that, which I don’t. I don’t have to engage in identity theft or sock puppetry to win these arguments, Davy, and I don’t.

  3. JuanP on Fri, 1st Feb 2019 8:01 pm 

    Davy “Are you on drugs are just going through a bipolar mania?”

    I am neither on drugs nor bipolar. Those are simply more infantile put downs on the part of the board’s bully which means I have won the argument once more. And, since I have won again, I will take my victory and enjoy it! ROFLMFAO!

  4. Davy on Fri, 1st Feb 2019 8:03 pm 

    “And, more false accusations that I do that, which I don’t. I don’t have to engage in identity theft or sock puppetry to win these arguments, Davy, and I don’t”
    LOL, now you are just going off in the deep end of lies. That is enough. You are just playing the lunatic. See you in the morning fuck nut

    BTW, I have all this shit documented and you will eat it later. One of your biggest problems is you talk too much.

  5. JuanP on Fri, 1st Feb 2019 8:14 pm 

    Mak, the tomatoes split open. Your place sounds real cool, and I guess you’ll never lack water. Using gravity and the terrain is the way to go, natural, passive, low tech, sustainable systems are the best.

    I designed a gravity fed irrigation system using ponds, berms, and swales for a friend’s farm in the Dominican Republic which has been working very well. Everything is planted on the berms to keep roots from getting flooded. The water is kept on ponds at different levels and released during the dry season.

  6. JuanP on Fri, 1st Feb 2019 8:16 pm 

    Davy “BTW, I have all this shit documented and you will eat it later. One of your biggest problems is you talk too much.”

    You are projecting again, Davy! LOL!

  7. JuanP on Fri, 1st Feb 2019 8:20 pm 

    Davy “See you in the morning fuck nut”

    Yes, you will! That is a promise! LOL!

  8. Cloggie on Fri, 1st Feb 2019 11:52 pm 

    EU-Japan form the world’s largest free trade area:

    https://www.bbc.com/news/business-47086737

    Japan would be a valuable partner of PBM to contain China, “after the break”.

    “Axis done right”

  9. makati1 on Sat, 2nd Feb 2019 1:02 am 

    Cloggie, why contain China? It will be Europe’s biggest trading partner by then and Japan will be a 3rd world country…again. The New Silk Road will guarantee that this is China’s Century, IF the US doesn’t start WW3. Then it will be nobody’s century as humans will not be here for most of it.

  10. I AM THE MOB on Sat, 2nd Feb 2019 3:09 am 

    Mak

    The new silk road is a joke and 80 percent of it are in junk status..even India their next door neighbor didn’t want to join..And when the oil shortage hits..Its game over for Asia and Europe..They are the worlds two largest oil importers..So they will collapse the hardest and fastest!

  11. Cloggie on Sat, 2nd Feb 2019 3:28 am 

    Cloggie, why contain China? It will be Europe’s biggest trading partner by then and Japan will be a 3rd world country…again. The New Silk Road will guarantee that this is China’s Century, IF the US doesn’t start WW3. Then it will be nobody’s century as humans will not be here for most of it.

    China will be our biggest trade and geopolitical partner indeed, but geopolitics=geopolitics and naivety has no place in it, unless you want the Chinese to show up at the Ural mountains. Alliance systems are like insurance policies or like the beams to hold a bridge or building together. This is not “moral hostility against gravity”, merely the acknowledgement that gravity and its effects exists.

    Japan never was a third world country and unlikely will be in the future. They are thoroughly committed to guard their racial integrity, the best guarantee for their survival, even if they go through a temporary period of demographic decline, which has its advantages as Japan is overpopulated anyway.

    If America DOES start WW3 (and nobody else will start it), they are going to lose that fight. As this Chinese admiral said recently: America can’t take casualties, where authoritarian China can sacrifice millions:

    https://www.dailymail.co.uk/news/article-6545475/Admiral-warns-U-S-Chinas-navy-sink-two-aircraft-carriers-kill-10-000-sailors.html

    No great power is going to use nukes, because they all know that if you do, you lose your country. Two nukes on Washington and NYC and the decapitated US will fall apart and the US deep state knows it because of lack of central leadership. China can sink a carrier without running the risk of being nuked, retaliation will occur elsewhere, in measure.

  12. Free Speech Message Board on Sat, 2nd Feb 2019 3:47 am 

    The US is a bankrupt warmongering police state.

    Not only do Americans think surrender is the answer to tyranny, Americans want to shut down anyone who spreads news about the collapse.

    Insanity.

  13. Cloggie on Sat, 2nd Feb 2019 3:58 am 

    And when the oil shortage hits..Its game over for Asia and Europe..They are the worlds two largest oil importers..So they will collapse the hardest and fastest!

    https://deepresource.wordpress.com/2015/04/07/fracking-is-for-amateurs/

    https://www.euractiv.com/section/energy/news/almost-90-of-new-energy-in-europe-from-renewable-sources-in-2016/

    http://coolspotters.com/files/photos/106416/giving-the-finger-profile.jpg

  14. print baby print on Sat, 2nd Feb 2019 4:24 am 

    https://www.bloomberg.com/news/articles/2019-01-30/venezuela-has-20-tons-of-gold-ready-to-ship-destination-unknown

    What I want to show with this link is : What a madness 20tons of gold. WOW 20tons of gold = 840mil of crappy paper and now one person alone can by it, it is madness . I know there are persons who can by 2000t of gold , can you imagine . That shouldn’t have happened ever never period . I am not a communist for everybody who think I am . but this kind of bullshit planet cant stand

  15. Cloggie on Sat, 2nd Feb 2019 4:29 am 

    Scotland could be the first to initiate the balkanization of Anglosphere. In case of a no-deal Brexit, Scotland will undertake an escape attempt from London and sneak out, possibly even without a referendum, capitalizing on a growing economic chaos, as an emergency measure of government:

    https://www.express.co.uk/news/uk/1078773/Nicola-Sturgeon-Brexit-independence-referendum-no-deal-Scotland

    If Britain can sneak out of Europe without a deal, Scotland can sneak out of Britain without a deal and go Europe-direct as an independent country.

    I wouldn’t be surprised if Ireland (6.6 million) could take back Northern-Ireland (1.9 million) as the protestants are not in the clear majority:

    At the 2011 census, 41.5% of the population identified as Protestant/non-Roman Catholic Christian, 41% as Roman Catholic, and 0.8% as non-Christian, while 17% identified with no religion or did not state one.

    https://www.bbc.com/news/uk-northern-ireland-43823506

    “‘Catholic majority possible’ in NI by 2021”

    https://www.bbc.com/news/uk-northern-ireland-45391529

    “Brexit ‘could create a majority for a united Ireland'”

    Certainly if Scotland would give the “good example” first.

    This would solve all the problems between Britain (England rather) and the EU.

    #Backstop

  16. makati1 on Sat, 2nd Feb 2019 4:44 am 

    “Almost 90% of new energy…” NEW energy, not total energy.

    Maybe you need to take a look at this 2018 poll?

    https://www.statista.com/statistics/952797/public-perceptions-on-environment-in-europe/

    Black line is total renewable energy.
    Blue line is the guesstimate of that country’s citizens.

    Netherlands = Renewable energy is about 6% of total energy use.

    Sweden has the highest at 53%.

    Russia the least at 3%, but then they have abundant FFs.

  17. Davy on Sat, 2nd Feb 2019 5:16 am 

    “The New Silk Road will guarantee that this is China’s Century, IF the US doesn’t start WW3. Then it will be nobody’s century as humans will not be here for most of it.”

    The BRI is already failing because of corruption and bogus business models. China is heading for a hard landing domestically. I will give you several updates later, makato. BTW, PBM and the break is a fantasy.

  18. Davy on Sat, 2nd Feb 2019 5:18 am 

    “China will be our biggest trade and geopolitical partner indeed, but geopolitics=geopolitics and naivety has no place in it, unless you want the Chinese to show up at the Ural mountains. Alliance systems are like insurance policies or like the beams to hold a bridge or building together. This is not “moral hostility against gravity”, merely the acknowledgement that gravity and its effects exists.”

    Do you have any references with content on that subject, clogged? Just saying it is so does not make it so.

  19. JuanP on Sat, 2nd Feb 2019 6:39 am 

    Davy “The BRI is already failing because of corruption and bogus business models. China is heading for a hard landing domestically. I will give you several updates later, makato.”

    Do you have any references to back your opinions, Davy? Just saying it is so doesn’t make it so! LOL! You have been saying that china is collapsing every single day for over five years. Your opinion on this subject has been proven systematically incorrect always. You are an extremely biased sinophobe and everything you say about China is completely worthless and irrelevant.

  20. Davy on Sat, 2nd Feb 2019 7:16 am 

    “Do you have any references to back your opinions, Davy?”

    “A New Direction for China’s Belt and Road
    The massive infrastructure development program needs a course correction.”
    https://tinyurl.com/yc2mqfpl

    “Pakistan To Request IMF Bailout Over US Opposition”
    https://tinyurl.com/y9ljjhoe
    https://tinyurl.com/y7q8mn32

    “China To Take Over Kenya’s Largest Port Over Unpaid Chinese Loan”
    https://tinyurl.com/y73ez5pp

    I have more but you need to list some of yours

    “Just saying it is so doesn’t make it so! LOL! You have been saying that china is collapsing every single day for over five years.’
    Exaggerations with triggered emotional emphasis of an individual with a borderline personality . I have posted multiple articles with specific content. You just chose not to read it

    “Your opinion on this subject has been proven systematically incorrect always.”
    OK I will use your above:
    “Do you have any references to back your opinions, Juan?”

    “You are an extremely biased sinophobe and everything you say about China is completely worthless and irrelevant.”
    I balance the rabid anti-Americanism from spammers like clogged and makato and board terrorist like you with relevant current events you just choose to shoot the messenger.

  21. JuanP on Sat, 2nd Feb 2019 7:33 am 

    Do you think that you can invest trillions in thousands of projects across most of the planet and not have some minor problems here and there, Davy? Trade between BRI countries is exploding! I have posted links here many times but you choose to ignore everything that contradicts your delusional exceptionalist opinions, Davy. So, you post links to ONE Chinese loan that went bad in Africa, meanwhile China is doing more to help the whole African continent now than Europe or the USA did in centuries. And Pakistan has essentially been a failed state since long before China started investing there, it became one while the USA was its supposed ally.

    You are grasping at straws, Davy, as usual! LOL! You have zero credibility where China and Russia are concerned. You are too biased to be capable of seeing the truth.

  22. JuanP on Sat, 2nd Feb 2019 7:39 am 

    Davy “I balance the rabid anti-Americanism from spammers like clogged and makato and board terrorist like you with relevant current events you just choose to shoot the messenger.”

    You are the most unbalanced person on this forum, Davy! There is nobody here called clogged or makato; your name calling is infantile and reflects your immaturity. If you could debate like a grownup you wouldn’t need to resort to ad hominem attacks. The biggest terrorist organization in the planet is the US government which you rabidly support, which makes YOU a terrorist supporter.

  23. JuanP on Sat, 2nd Feb 2019 7:44 am 

    Davy ““Just saying it is so doesn’t make it so! LOL! You have been saying that china is collapsing every single day for over five years.’
    Exaggerations with triggered emotional emphasis of an individual with a borderline personality.”

    Absolutely not an exaggeration. Exactly the truth! LOL! You are the one that gets triggered and emotional which is symptomatic of your multiple mental problems. And, you are way past the borderline; you were probably born past it. You seem to be genetically defective.

  24. I AM THE MOB on Sat, 2nd Feb 2019 7:49 am 

    CLogg

    Your future is tyranny government and forced labor for some rationed food..

    lol

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead
    https://www.wsj.com/articles/saudi-minister-sees-end-of-oil-price-slump-1476870790

    There will be an oil shortage in the 2020’s, Goldman Sachs says
    https://www.cnbc.com/2018/11/09/goldman-sachs-there-will-be-an-oil-shortage-in-the-2020s.html

    Wood Mackenzie warns of oil and gas supply crunch
    https://www.ft.com/content/a1eb0e58-d7a4-11e8-ab8e-6be0dcf18713

    Imminent peak oil could burst US, global economic bubble – study
    https://www.theguardian.com/environment/earth-insight/2013/nov/19/peak-oil-economicgrowth

    German Military (leaked) Peak Oil study: oil is used in the production of 95% of all industrial goods, so a shortage of oil would collapse the world economy & world governments
    https://www.scribd.com/document/387459134/german

  25. I AM THE MOB on Sat, 2nd Feb 2019 7:52 am 

    America is falling out of love with billionaires, and it’s about time

    https://www.latimes.com/business/hiltzik/la-fi-hiltzik-billionaires-20190201-story.html

    American billionaires should be worried about ‘losing everything above their mid-neck’

    A rising tide seizes all yachts

  26. Cloggie on Sat, 2nd Feb 2019 8:18 am 

    “America is falling out of love with billionaires, and it’s about time”

    George Soros, Jeff Bezos, Bloomberg, Suckerberg, Coffee-Howard…. I saw them first!

  27. I AM THE MOB on Sat, 2nd Feb 2019 8:29 am 

    Clogg

    When have you seen me supporting those people?

    And those people are liberals..I am not a liberal..I am a socialist!

    You’re the one who is on your knees daily for Putin and Trump..

  28. I AM THE MOB on Sat, 2nd Feb 2019 8:41 am 

    ‘Pro-white’ rally at Stone Mountain collapses amid internal strife

    https://www.wsbradio.com/news/breaking-news/pro-white-rally-stone-mountain-collapses-amid-internal-strife/gvReqHeqcXNqFytV9xm1jK/

  29. Cloggie on Sat, 2nd Feb 2019 9:45 am 

    ‘Pro-white’ rally at Stone Mountain collapses amid internal strife

    Americans are too individualistic to pull off a grand rally.

    How different is for instance Poland:

    2015:

    https://www.youtube.com/watch?v=a7xqwm_c1_k

    2016:

    https://www.youtube.com/watch?v=BAjk7e82bFM

    Eastern Europeans have not been spoiled by decades of libtard globalist Hollywood brain-washing.

  30. I AM THE MOB on Sat, 2nd Feb 2019 10:59 am 

    Former Nazi SS Officer Tied Up, Robbed in His House, German Network Reports

    https://www.haaretz.com/world-news/europe/former-nazi-ss-officer-tied-up-robbed-in-his-house-german-network-reports-1.6897940

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