If you’ve been following our news section, it won’t surprise you to learn that gold is in demand as an investment, so much so it breached $2,000 US an ounce last month.
Thing is, gold is a finite source, and a question on the minds of every investor, mining company executive, precious-metals specialist, and gold collector is: How much gold is left in the world, and what can we do if we run out of our gold supply at some point?
The stats behind the commodity’s limits
Gold mine production faced its first annual decline since 2008 last year, when 2019 production mined 3,531 tonnes, 1% lower than in 2018.
Also, about half of all the gold ever mined has been taken from the earth since 1967, and 80% of all gold ever brought above ground was mined since 1910, according to the U.S. Geological Survey, as a Motley Fool report writes.
The report goes on to say, “Remaining reserves worldwide amount to just 30% of what’s been mined already — 54,000 metric tons of gold in sufficient concentrations, and buried at sufficiently accessible depths, to be mined at reasonable cost.”
Diving deep into how much gold is left
By some estimates, the below-ground stock of gold reserves is currently forecast to be around 50,000 tonnes, as BBC News writes.
Based on these rough estimates, that means 20% of gold has to still to be mined. But this is a moving target.
BBC News writes how new technologies could make it possible to extract some known reserves that aren’t currently economical to access.
“The most recent innovations include big data, AI, and smart data mining, which can potentially optimize processes and bring down costs. Robotics are already being used at some sites, and are expected to increasingly become standard technologies in mine exploration.”
Still, mining companies realize there is only so much they can do. “The largest and most prolific reserves have already been found,” Matthew Miller, an analyst at CFRA Research, told DW. “Gold miners are struggling to grow reserves in line with their production.”
Unfortunately, there aren’t many unexplored regions left for gold-mining, even if the most promising sites dot unstable areas such as in West Africa.
In a previous news report, we broke down the many ways gold can be processed, which is always helpful in understanding the limits placed on mining companies.
So what’s the relationship between the price of gold and the high demand but low supply? BBC News notes that even though gold prices hit a record high in August 2020, that increase doesn’t automatically translate into a rise in mining activity and boosting the world’s gold supply.
In fact, shifts in gold mine production often lag changes in the gold price in a significant way.
“Given the scale of operations involved, it takes time to alter mine plans in response to changes in external factors, such as the price of gold,” says Hannah Brandstaetter, a spokesman for the World Gold Council.
It should be noted, too, the record prices occurred during Covid-19 restrictions, making it harder to mine, as sites were closed or somewhat shut down to curb the spread of the virus.
Price rises have actually been driven by the pandemic as investors view gold as a safer asset in times of economic uncertainty, an area we explore in-depth in this blog post on how the pandemic has affected gold prices.
Some experts are optimistic about the gold supply’s extraction potential in the coming years.
“Demand continues to grow with the growing populations of India and China… [As they] obtain more discretionary income, they will buy gold, that will impact the price of gold, and that will bring people back to exploration,” according to Karr McCurdy, partner at Rock Elm Capital.
He told Kitco his experience in the geological field propels him to believe a change of attitudes towards exploration could reshape the industry.
“It’s all about perception,” McCurdy said. “Early in my career, most gold mining focused on very select high-grade targets with visible gold, and the concept of microscopic gold was just being discovered.” When that happened, he added, public outlook shifted significantly and new technology was developed, revealing substantial gains.
Look above for an answer to the gold supply?
How much gold is left in the world may be finite, but space may be a final frontier to explore and extract the attractive commodity.
It might sound far-fetched, but astrophysicist Neil deGrasse Tyson has suggested that space rocks making up the Asteroid Belt could be literally packed with gold, perhaps as much as a half-tonne or more contained in the core of any given asteroid.
He even said, “The man who first learns to mine asteroids and bring back their minerals to Earth will become the first trillionaire. There’s no question about that in my mind.”
What does this lack of gold and the hunger for the precious metal mean for you? If you have gold you’re looking to trade in for extra cash, the price of gold has reached such an impressive level you might not want to hesitate to see if you can get a nice return for your jewellery, coins or bullion.
Our team of precious-metals specialists is available to answer any question you have about selling or buying gold, so contact us anytime.