Peak Gold Has Arrived

Authored by Alex Deluce via GoldTelegraph.com,

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.

The Chinese are 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.

World Gold Council Chairman Randall Oliphant has indicated that global gold production may have reach its peak. The time may come soon when the supply is not expected to meet the demand. The price of gold usually rises during times of economic slowdowns. How will the global financial market react when the supply of gold is running low and gold becomes an even rarer commodity?

China is not the only country producing less gold. South African and Australian gold deposits are showing signs of becoming depleted. The cost of exploring for new gold has become cost prohibitive and viable deposits are becoming more difficult to reach.

The potential of a worldwide shortage is good news for investors. Even as mines become exhausted, gold as a commodity will still exist. Gold differs from oil, which, once used up, is physically gone.

But gold mining and exploration will become more costly. For over 130 years, massive gold deposits were discovered in a number of countries. Gold has been easy to access and produce. During the late 20th century, some mines were producing as much as 50 million ounces of year a year. In the 21st century, mines producing 50 million or even 30 million ounces of gold no longer exist. Gold exploration is down to a few discoveries producing 15 million ounces annually.

The price of gold has fallen steadily since 2012. Mining companies are unable to fund new explorations. The time between gold discovery and active mining spans an average of seven years. This is a considerable time span between the exhaustion of old mines and the mining of new ones. And mining companies will find it difficult to bear the expense.

Once productive and seemingly endless gold deposits are depleting quickly. Forty percent of all the gold mined throughout history has come from the Witwatersrand Basin in South Africa. During the 1970s, an excess of 1,000 metric ton of gold was mined each year. In 2017, Witwatersrand Basin’s gold production fell 83 percent compared to 1970, down to 167.1 tons.

China, is still exploring veins for more gold. But how long will it be able to justify the cost as mining for gold that lays deeper in the earths crust? More capital is needed for further gold exploration globally.

Until that happens, the supply of gold will remain low and the demand will rise. This means that in the near future, this could serve as a major catalyst moving forward.

Comments

38BWD22 Trader Maximus Wed, 03/14/2018 - 23:25 Permalink

 

There is plenty of gold in the world.  Lots of it.  175,000 tonnes (approx.).  As the author mentions, very little gold gets used up.

There will always be "enough" gold, if it gets scarcer, the price will just go up.  The future price will likely depend on demand for gold.

That would be real, physical gold.  

"FOFOA 101"

In reply to by Trader Maximus

Stuck on Zero 38BWD22 Wed, 03/14/2018 - 23:29 Permalink

Is anyone counting production from illicit miners?  National Geographic estimated tens of millions of bootleg miners all over the world. I know that Peru is getting scarred up horribly and poisoned by Mercury by these operations.

In reply to by 38BWD22

AllBentOutOfShape 38BWD22 Thu, 03/15/2018 - 01:23 Permalink

"Corruption in the .gov of Peru, at all levels, makes it worse."

What do you expect from a president descended from a German Jew, educated in England and the USA, and having a resume that spans the World Bank and investment banks in NYC?

In reply to by 38BWD22

EddieLomax 38BWD22 Thu, 03/15/2018 - 07:07 Permalink

That is a big missing piece of the puzzle here, small scale mining like in Peru will go into overdrive when the price goes up.

My guess is we'll see a double whammy again, gold supply will be short and oil will be expensive (we are not paying enough to sustain future demand - so that has to spike).  In that case it could be gold to the moon and every 3rd world ecology will be screwed.

But just to add info to those graphs, its approximately 30,000 ounces to a ton, so we have been finding 1/2 to a 1/6th of what we mined for a long time, like oil something has to break.

The future sure does look interesting, oil exploration doesn't cover current demand, gold doesn't cover current demand.  Are these the only commodities lacking investment, or is this a systematic problem?  If its the latter then the next crash is going to be massive.

I remember reading a paper from an investment guy named islamoisland or something like that (nothing to do with Islam) where he had gone all in on an oil crash, way too early.  Would be interesting to know what happened there if anyone has any info.

In reply to by 38BWD22

mayhem_korner 38BWD22 Wed, 03/14/2018 - 23:38 Permalink

If it gets scarcer, the price will just go up.

I think you win the "bring back the captcha" comment of the day with that - congrats.

Let's correct:

As physical gold continues to be held, price increases are forestalled by the issuance and flash-crash manipulation of paper "claims" on gold.

In reply to by 38BWD22

BobEore mayhem_korner Wed, 03/14/2018 - 23:56 Permalink

Let's correct.

\as understanding of the real source and motive for metals manipulation continues to be forestalled by the pathetic resort to paper ARROWS... in place of any rational argument...

punters will continue to delude themselves whilst desperately attempting to induce others to join them in their bagholder death cult./

congrats.

In reply to by mayhem_korner

BobEore Bay of Pigs Thu, 03/15/2018 - 01:10 Permalink

Not sure who he thinks is a reliable or trustworthy source on the subject, aside from himself.thy

Having put a link towards a reliable trustworthy source ... not once.. not twice... but THREE x today alone... in front of the gormless gang who will continue to refuse ALL invitations to peruse ANY information contrary to their failed metals narrative

'he' indeed... can mock them all equally...

knowing that nothing but rocks be up in those melon crates above their shoulders!

In reply to by Bay of Pigs

BobEore mayhem_korner Thu, 03/15/2018 - 01:14 Permalink

It is advisable to gain at least perfunctory working knowledge of your own first language donkeyboy.

You do know what a link is right? If you are afraid to open the proffered link...

to a world of gold analysis beyond your imaginative and cognitive faculties... stay in your safe place... and be another 'internet tuff guy, with an arsenal of paper arrows!

In reply to by mayhem_korner

BobEore Pandelis Thu, 03/15/2018 - 01:22 Permalink

he he heh...

before there was Keith Weiner ... there was Marty for the morons of the sewer pipes of Goldburg to take their angst n spleen out pon. Now Armstrong enjoys a strong following among those who still have ammo left to play with...

while the road kill warriors here continue to pop up with their paper arrows to take pot shots at every body who refused to join their Jonestown cyanide party!

Better luck next time losers!

In reply to by Pandelis

BobEore BobEore Thu, 03/15/2018 - 01:42 Permalink

Oh! And this jus in!

I see Chris Powell has already responded to the Weiners Words.

Buttressing his case ... or in this case... buttressing the case for claiming we now see TOTAL CAPITULATION on the part of GOLDS ROADKILL WARRIOR CASTE...

by invoking Mr. barbarous relic himself as the soothsayer of choice to explain why he is right!

"Greenspan testified: “Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”

Bathed in sweat... coated in their own excrement and exhausted from the effort to throw fecal matter at the walls of their cells...

the GATA GANG has indeed reached PEAK INSANITY at last!

ONLY ONE KNOWN ANTIDOTE EXISTS - https://www.scribd.com/lists/8831150/The-Golden-Fleece ENJOY!

In reply to by BobEore

Pearson365 BobEore Thu, 03/15/2018 - 05:36 Permalink

Your link establishes that price is not set by supply or demand which I'm in agreement with. It is set by a banker FIX and beaucoup paper derivatives. At least for now anyway.  In any event when local coin shops run very low on stock or when the manipulated price gets absurdly low, the premiums rise substantially. Why you need to spy on and intimidate people is another question entirely.

In reply to by BobEore

canisdirus 38BWD22 Wed, 03/14/2018 - 23:48 Permalink

I’m with you. Nobody believes me, though.

Unlike ancient history, no governments demand gold in payment for taxes, therefore there is no real consistent demand beyond industrial uses and jewelry. The latter is weakening for macro and social reasons, which further depresses demand. Hoarding it isn’t effective, either, as it will lose value further. Precious metals, like all currencies, are only valuable because someone else demands them for something you need/want.

In reply to by 38BWD22

mayhem_korner canisdirus Thu, 03/15/2018 - 00:45 Permalink

@canisdirus

Precious metals, like all currencies, are only valuable because someone else demands them for something you need/want.

And with that, you make the point that completely defeats your (attempted) argument. 

Gold is a currency - it is the ALPHA currency.  But the CBs treat it like a commodity - and even produce a surrogate for it - to mask that fact.

Replace "precious metals" in your sentence with "printed dollars" and then think on it a bit. 

In reply to by canisdirus

MusicIsYou MrBoompi Thu, 03/15/2018 - 01:09 Permalink

Except that when manufacturers need actual gold, paper gold isnt going to do it. And then when people who own bitcoin need golden computer parts to use their bitcoin, the owners of physical gold will say, "Sure, I'll sell you an ounce of gold for $1 million of bitcoin. Because when it comes down to reality, the people who own something real run the show.

In reply to by MrBoompi

meterman MrBoompi Thu, 03/15/2018 - 18:58 Permalink

Here we go again!

The Gold HUCKSTERS claiming a shortage of Gold (Do any of you remember 2012 when HUCKSTER after HUCKSTER harped daily here at Zero Value - Sorry - Zero Hedge that the supply of gold was almost dry -

"BUY NOW - BUY NOW before there is none for you -

Gold going to $30,000/oz soon", or some other similar BS.

For the newbee - Beware the HUCKSTERS. 

In reply to by MrBoompi

Stevious Wed, 03/14/2018 - 23:17 Permalink

Indeed, and I remember the first time "peak oil" had been reached: 1972.

OK.

By Gold Telegraph.com, uh think they might have some vested interest into trying to convince people that gold will rise.  Sure it will, but not until it breaks $1000.