Seize It Before It Slips: Are Gold Reserves Depleting?
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As the precious yellow metal—gold—reaches its peak production, analysts believe that we might have explored all the richest gold deposits in the world. So, how will investors take it?
Within the last two years, people have started talking more about the depleting resource of gold.
Several analysts and metal industry savants, including Ian Telfer,Goldcorp’s chairman, have predicted a potential downturn in the production of gold from its current rate.
Gold production has hit its peak several times in the past. But the fact that we are out of any more major gold deposits to explore makes the current spike the most alarming.
Let’s have a closer look at the gold supply across the globe and when we might be at the edge of running out of any more gold supplies.
Current Major Gold Deposits
To understand how much gold is left in the world and how long we have before it comes to an end, it’s viable to learn about the significant sources of gold present currently worldwide.
Witwatersrand Basin, South Africa, has been the biggest source of gold production for centuries, with gold production of more than 1.5 billion troy ounces ever since its discovery in 1886. This geological miracle contributes to up to 50% of all the world’s gold that has ever been extracted. However, in recent years, gold production has fallen to 170 tons per annum.
- Other significant sources of gold include
- the Mponeng mine in China
- Australia’s Super Pit and Newmont Boddington mines
- The Grasberg Mine in Indonesia,
- The mines in Nevada, USA
According to recent estimations, every year up to 3,000 tons of gold is mined from scratch. Analysts believe that around 190,000 tons of gold stand above the ground, at present.
How Long Before We Run out of Gold?
Recent studies have shown that gold mining could reach an economically unstable point by the year 2050. However, new explorations and advancement in technology may enable mining companies to discover more gold deposits, but large-scale mining may likely come to a halt by the year 2075.
The toll of Mergers and Acquisitions
Because of the predictions, many gold producing giants have chosen the path of mergers and acquisitions because of declining returns and depleting gold reserves.
Just last week, Barrick Gold and Newmont Mining, the two tycoons of the gold mining industry, agreed on a joint venture. This year, in January, Barrick Gold acquired Randgold Resources, an African mining company for $6.1 billion,while Newmont completed the acquisition of a smaller competitor Goldcorp for $10 billion.
The Decline in Gold Prices
With the depletion of gold reserves, companies are finding it difficult to make up for their lost gold production because of lack of new deposits.
The price of gold has dropped down from $1,800 per ounce to $1,300 per ounce from the beginning of 2020. According to experts, the price needs to be $1500 per ounce to maintain the economically stable levels of gold production.
What It Means for the Investors
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