Gold mining enterprises’ survival and continued operation depend on their ability to keep swimming, find new gold seams, or otherwise replenish their holdings. The World Gold Council reported that 2019 saw the first global production reduction in ten years, a 1% decrease in new gold mine production, making it a positive year for the industry. In that same year, the management consulting firm McKinsey released a report suggesting that there was a “crisis in gold mining reserve” and that “many of the world’s major goldfields” were dealing with “the issue of depleting reserves… there is a risk of exhausting, or nearly exhausting, reserves for many gold companies.”

It appears that reserves are dwindling; the known quantity of gold in the ground has decreased from 1.1 billion ounces from 124 deposits in the 1990s to 674 million ounces from 93 deposits since 2000. Lower reserves and slower production: the average time from discovery to production has increased from eight years in 1985 to more than twenty years today.

However, while individual gold mining companies are under increased pressure to discover new gold reserves or acquire them from competitors, the notion that we are approaching “peak gold” must be deconstructed. The maximum rate of gold extraction will be reached at some point (which may already have occurred). However, this is not the same as peak supply; gold is infinitely recyclable.

Gold’s likely future is that as the race to discover new reserves intensifies, so will mergers and acquisitions among gold mining companies. As the difficulty of extracting new gold from the ground becomes more apparent, the gold price will likely rise where gold holders – of jewellery, bars, and coins – are tempted to resell and recycle their gold.
Unless gold investors believe the price will rise even further.