Friday, 27 March 2015

ZeroHedge: Peak Gold? Goldman Calculates There Is Only 20 Years Of Gold Supply Left.


  Finally the word is out and multiplied by ZeroHedge. Let's wait when the story will hit mass media now.

Peak Gold: 10 Remarkable Gold and Silver Trends Going Into 2015.

"Gold production is expected to peak in 2015. As the next chart suggests, the discovery cycle peaked some 20 years ago, and that will only reflect as of this year in the production volumes. Combine this with the falling gold prices (currently right below the average cost of production), and the result is a series of liquidations of miners and mining projects which would lead to an even more drastic short-term decrease of gold output. Read more."

TNR Gold: Shotgun Gold Project Development in Alaska.

 "Nova Gold has published its new presentation for PDAC 2015. Now you can find more information about Alaska as mining jurisdiction and Donlin Gold type of Gold deposit. TNR Gold owns 100% of Shotgun Gold project in Alaska, which has very similar geology to Donlin Gold, according to Greg Johnson - one of the founders of Nova Gold. Read more."


Peak Gold? Goldman Calculates There Is Only 20 Years Of Gold Supply Left

Late last year, when looking at a Goldcorp slideshow, we noticed something surprising: the gold miner had forecast that 2015 would be the year when gold production would peak among the mining industry.

To be sure Goldcorp was really just pitching its own balance sheet, and was more focused on its far more levered gold-mining competitors going out of business...
... and hence facilitating "peak production" this year as one after another producer is forced to file for bankruptcy, than actually making a statement on how much gold remains to be mined in the ground. Because the last thing even the most healthy gold miner, with the lowest production cost wants, is to face a world in which their primary commodity is running out.
Which may just be this world.
According to a report issued by Goldman's Eugene King looking at commodity scarcity, the chart below "shows that there are only 20 years of known mineable reserves of gold and diamonds."
Some futher observations on gold and scarcity in general from Goldman:
The combination of very low concentrations of metals in the Earth’s curst, and very few high-quality deposits, means some things are truly scarce. Perhaps unsurprisingly, these are the so-called precious metals (and diamonds), and that their value is derived from the fact they are rare. 

Their relatively scarcity, and the market’s belief that new discoveries will be limited, is what drives the price of these super rare commodities. Take diamonds as perhaps the most extreme example. A diamond has very little intrinsic value. Its value is determined by a belief that it is rare and, for a natural diamond, unique. 

Gold has been used as a measure of wealth for more than 4,000 years, as the ancient Egyptians soon worked out that gold was not only shiny and heavy, but rare.
Of course, this analysis is meaningless in a vacuum: if the "known reserves" of gold plunge in the coming decade, no matter how many gold futures and GLD short sales are conducted by the BIS, the price will have to go up, and it will go up high enough to where a new surge of gold miners will come online and find thousands of new tons of gold reserves around the globe. 
Unless they don't, and Goldman is correct that "peak gold" may have arrived. This will be even more true if over the coming years the long overdue fiat economic panic finally washes over the globe, and a revulsion toward central bank policies forces a scramble into gold whose value (if not price since fiat currencies will be redundant) soars. 
The answer is unclear, but what is certain is that like the price of oil over the past decade and until last fall when price discovery finally became somwhat credible, what happens in the physical realm has absolutely zero marginal impact on the price of commodity which has about 100 ounces in deliverable paper contracts for every ounce in underlying. It will be only after the gold price distortions via the derivative market are eliminated that such trivial price-formation forces as supply and demand are once again relevant. ZeroHedge."