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Best of the Web – How Gold Will Respond to Declining Discovery?

by Jan Skoyles,

Since the fall in the gold price in April 2013, one of the bullish drivers for the yellow metal has been the high cost of production versus the gold price. Many gold analysts have been torn by what impact the low gold price will really have on mining, given many of the significant costs in gold production are sunk costs and, therefore, no longer relevant to the daily cost of gold production.

However, all of this is assuming that there is even gold to be mined, what if there just isn’t any being discovered any more? Surely it that instance it doesn’t matter what the paper gold price is doing because the fact is, there isn’t enough gold coming out of the ground to meet physical demand.

How realistic is this scenario though? According to Pierre Lassonde, gold demand has increased 42% in the last decade, however gold production has remained relatively constant. Gold discovery has fallen by over 60% since the 1990s when approximately 100 million ounces were discovered, compared to 30 million in the last ten years.

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