Could the world run out of mineable gold in 20 years?

nugget gold

Gold’s extreme rarity is one of the major factors contributing to its high value and status as a “precious” metal. But just how rare and scarce is it at this point?

According to report by Goldman Sachs on commodity scarcity, the world could run out of mineable gold in 20 years.

“The combination of very low concentrations of metals in the Earth’s crust, and very few high-quality deposits, means some things are truly scarce,” Eugene King, European metals and mining analyst at Goldman Sachs, said in a note. “Their relative scarcity, and the market’s belief that new discoveries will be limited, is what drives the price of these super rare commodities.”

The report used the chart below to show that “there are only 20 years of known mineable reserves of gold and diamonds”:

goldman-supply-chart

 

Of course, new discoveries of gold deposits can be made, but lately they have proven hard to come by. The chart below shows the steep decline in discoveries since 2008 (also note how few discoveries were made in 2010-2013):

gold-discoveries-chart

Gold exploration and discovery projects are expensive and involve a high risk that little or nothing will be found. They’re especially difficult to carry out now with gold at relatively low prices.

The belief that miners have reached “peak gold” is not new. Chuck Jeannes, CEO of Goldcorp, told the Wall Street Journal in September: “Whether it is this year or next year, I don’t think we will ever see the gold production reach these levels again. There are just not that many new mines being found and developed.” To demonstrate this point, Goldcorp showed the following chart in its October 2014 Corporate Update presentation:

peak-gold-chart

So what could this mean for gold? A constrained supply, as well as the fact that gold is currently selling for just above the cost to produce it, should help gold prices rise. At the very least it should limit the downside, which at this point seems far less than the upside.

Want to take advantage of this unique opportunity? Call American Bullion today at 1-800-326-9598 to speak with a precious metals broker about adding physical gold to your retirement account or purchasing gold coins and bars for secure delivery to your home. You may also request a Free Gold Guide for more information.

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Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.