Normally, I don’t step out and make such bold statements as gold mining supply IS collapsing, however, in this case it seems appropriate. We have reported on several occasions just in the past week, here, here and here how some of the largest mining companies in the world are seeing massive reductions in gold production. While funding continues to flow into mining companies new discoveries, with few exceptions, are smaller and have much shorter production lifespans.
We recently interviewed (MUST LISTEN) the President/CEO of First Mining Gold, Jeff Swinoga, and his company is on the verge of bringing online one of the largest discoveries in some time. The Springpole project has an inferred 5 million ounces of gold in the ground. While 5 million ounces is a very impressive, and large, discovery the gold market needs about 10-15 more of these to keep pace with the current trend of gold acquisitions by central banks, the top government bullion mints and private bullion mints around the world. The gold discoveries are not manifesting.
While we have been saying capital inflows have been the problem, which we now can say we missed the mark, it has been the actual discoveries that have been the problem in more gold coming to market. Plenty of funding, serious lack of gold waiting to be found.
The demand for gold is increasing, yet new discoveries of the precious metal have not kept pace with the demand. Funds for exploration are historically high, $54.3 billion, up 60 percent over the past 18 years.
The increased spending, however, has not produced the equivalent in new gold discoveries. During the past decade, 41 discoveries have resulted in a mere 215.5 million ounces of the precious metal. Even counting recently discovered but unexplored mines, which may hold as-yet major discoveries, the total available amount of gold in these discoveries are not expected to surpass 363 million ounces over the next ten years.
Gold discoveries have followed a predictable pattern. 263 major gold discoveries have been made in the past 28 years, but half of those discoveries happened in the 1990s. This boom lasted until the turn of the century when the rate of discovery began to decline. Only 16 discoveries were reported from 2000 to 2002, which produced 108.3 ounces of gold. That amount was below the average finds of the 1990s. This decline has continued, with both new discoveries and the amount of gold mined decreasing steadily. By 2010, only 18.6 million ounces of gold was discovered, a severe drop from the 61.5 (million) ounces found in 2009.
Old sectors are being depleted, while active exploration for new discoveries has been slow. The amount of available gold has not met expectation and remains far below the 2009 high. Gold Telegraph
With the vast majority of mines discovered in the 1990’s now either completely drained or on their last leg it is past time for them to be replaced. Mines have a finite “life span” The problem is, the gold in the ground may be too deep, too expensive or too small a deposit to replace these older mines. I feel confident most of the mines around the world still have gold, silver and other metals awaiting to be processed, the problem is return-on-investment.
Continued gold exploration has become critical. In 2018, Colorado-based Newmont Mining Corp., one of the world 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 to unprecedented depths of 3 kilometers below the surface hoping for new discoveries as new finds are becoming rarer and more expensive to pursue. Gold Telegraph
This may be the best support for what we have been saying for the past year. Gold and silver are currently very inexpensive and in the coming handful of years this is going to change significantly. As we move into the 2020 decade those that possess precious metals today will be very happy to have made the commitment, while those sitting on the sidelines will be very disappointed. Get physical and get it now, 2020 will be here before you know what happened.