Have We Hit Peak Gold?

After 50 years of constant increases production has now plateaued

Gold mine output has flatlined over the last several years and that trend appears to be continuing in 2019. Gold production rose fractionally in 2018 by about 1% totaling 3,346.9 tons. That compared with 3,318.92 tons mined in 2017  — a modest 28-ton increase year-on-year.

According to the World Gold Council’s Gold Demand Trends Q3 report, on a year-to-date basis, mine production ended the third quarter at 2,583 tons. That’s virtually identical to production levels at this point in 2018.

Looking at general the trend, we see signs of plateauing mine output over the last four years. According to the WGC, production was up 77.72 tons between 2015 and 2016, 33.92 tons between 2016 and 2017, and 28 tons between 2017 and 2018 and we’re on pace for little to no increase in 2019.

Gold production has generally increased every year since the 1970s. There was a drop in production in 2008, but that was something of an anomaly, as it occurred at the onset of the 2008 financial crisis. The recent slowdown in mine production is more concerning. In fact, many people speculate we may be at or near “peak gold.”

Peak gold is the point where the amount of gold mined out of the earth will begin to shrink every year. Some prominent players in the mining industry think we’re close to that point.

Over the last couple of years, several gold-mining executives have warned we have found most of the world’s minable gold. For instance, last year, Goldcorp chairman Ian Telfer said, “We’re right at peak gold here.”  And during the Denver Gold Forum in September 2017, World Gold Council chairman Randall Oliphant said he thought the world may have already reached that point. Franco-Nevada chairman Pierre Lassonde has also indicated he expects a significant dip in gold production in the coming years. And last spring, a report in Deutsche Welle made the case that we’re approaching peak gold.

Case in point – South Africa was once the world’s leading gold producer. It’s now dropped to number nine globally. Last year, a study came out saying  South Africa could run out of gold within four decades. Analysts say that at current production levels, the country has only 39 years of accessible gold reserves remaining.

So, which countries produce the most gold? Here are the rankings based on 2018 mine output according to the World Gold Council.

1. China – 404.1 tons.

China was the largest producer in the world in 2018 and accounted for around 12 percent of total global production. China has held the number one spot for the last several years. Production in China fell by 5% in 2018.

2. Australia – 314.9 tons

While production fell in many gold-producing countries, Australia was a trend buster. Output increased by 6.4% last year. The country accounts for about 9% of global production. Analysts say long-term output projections don’t look good.  MinEx Consulting released a report detailing an expected drop in gold output between 2017 and 2057 unless the amount spent on exploration is doubled.

3. Russia – 297.3 tons

Production was also up in Russia last year, with output increasing by about 27 tons. More than 80% of Europe’s gold comes from Russia. The Russian government is the biggest buyer of Russian gold. Much of the additional output last year was gobbled up by the Central Bank of Russia.

4. The United States – 221.7 tons

US mine production fell by 3.6% last year, snapping a four-year trend increasing gold output. The state of Nevada accounts for 78% of US gold output.

5. Canada – 189.0 tons

Canada was another country that saw a slight increase in gold production last year. The discovery of a significant goldfield in northern British Columbia in 2017 bumped Canada higher up the list of gold producers and could account for increased output in the coming years.

6. Peru – 158.4 tons

Peruvian mine output dropped by four tons in 2018. It was the third straight year of declining gold production for Peru.

7. Indonesia – 136.9 tons

Indonesian gold production plummeted by 17.4%. That follows on the heels of an 11.7% decline in mine output in 2017.

8. Ghana – 130.5

Ghana moved up two spots in the rankings, leap-frogging both Mexico and South Africa. The country produced nearly 30 more tons of gold in 2018 than it did in 2017. Ghana now ranks as Africa’s largest gold producer. Small mining companies account for the largest share of the total. Loosening government regulation and lower taxes have helped boost the countries mining sector.

9. South Africa – 129.8 tons

Output dropped again 2018, falling by another 10 tons. Once the largest gold producer in the world, today it isn’t even the largest in Africa.

10. Mexico – 115.4

Mexico has also seen a steep dropoff in gold production, with mine output falling 11.5% last year.

Source: Schiff Gold

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JustPassingThrough
JustPassingThrough
4 months ago

let me know when we get to peak “paper gold.”
then we’ll have something to talk about.

thomas malthaus
thomas malthaus
4 months ago

https://tradingeconomics.com/russia/gold-reserves

Russia has, by my reckoning, almost $120 billion in sovereign gold stores. Aside from Russia continuing to acquire gold, if the gold price increases four fold, they would almost effortlessly be able to wipe its external debt from its balance sheet.

Canosin
Canosin
4 months ago

Russia has no more foreign debt….. it’s unique. ..
besides, in the vast not yet fully explored arctic zones there’s plentiful of unexplored ore and minerals of almost everything that the industrialized world is needing. . incl. gold….
by the way….. the actual figure of Russia’s gold is much higher than officially released… same for China

JustPassingThrough
JustPassingThrough
4 months ago
Reply to  Canosin

…and the actual amount of US gold is much less than officially released. 🙂

thomas malthaus
thomas malthaus
4 months ago
Reply to  Canosin

I went by what the chart said. It has minimal exposure to no exposure US Treasuries. For all I know, Russia may have 3,000 tons and China around 25,000 tons. Official figures are not necessarily credible.

When the global hyperinflation kicks in, Russia will probably be busy mining new gold ores while importing gold in . . .wait for it. . .rubles.

That may seem far-fetched, but the crisis is young.

Canosin
Canosin
4 months ago

it’s not so far fetched….. dollar will implode….. the ruble will rise tremendously …by then, a new problem will kick in….payments in Rubles makes the cost of energy very expensive, of course not for Russia….

FilastinHuratan
FilastinHuratan
4 months ago
Reply to  Canosin

Another interesting issue is the amount of gold the US has. Officially there is supposed to be approx. 9000 tons, but no audits are allowed. A lot of that gold has been leased out or sold, so the USD might be a lot less gold-based than the empire-in-decline would have us believe.

Séamus Ó Néill
Séamus Ó Néill
4 months ago

If the US has any gold, it’s what they have stolen from Libya, the ME and their own South American neighbours,……they are habitual thieving psychopaths after all and everyone knows that there’s nothing in Fort Knox but spiders. When this massive recession hits, America will be hit the hardest, with Britain, Australia, Canada and Israel caught in the domino effect. Some morons in America still believe a war will solve their problems, but who will they war with ? China and Russia are too strong and America would suffer a massive humiliating defeat, likewise with Iran, not as strong but strategically positioned to wreck havoc in the whole ME, Israel being the first casualty. No, America’s in a pickle of her own making and how she extricates herself will be very interesting !

FilastinHuratan
FilastinHuratan
4 months ago

Good points, Séamus. The trouble is, if things happen the way you sketch, the empire-in-decline will wreak financial havoc on the rest of the world too as its going under will not be a smooth ride.

BTW, I fore one am convinced that the OUTLAW, psychopath-run, blackmailing, sanctioning, belligerent, rogue empire-in-decline will not attack Iran. Like you say, ziofascist “israel” would be toast for starters, while the Wahabbi head and limb choppers and their Gulf cronies would be served up for a main course, with the U.S. bases in the region to be served as a side dish or for dessert. All of which would be a price too high to pay.

JustPassingThrough
JustPassingThrough
4 months ago

she’s in a pickle getting more “pickled” each day.
no escape.

thomas malthaus
thomas malthaus
4 months ago
Reply to  Canosin

Russia will be fine and remain strong as long as they avoid a Washington-led global currency or SDR and maintain the ruble.

That’s almost equal to being in the euro.

The luxury of being self-sufficient in energy and for the most part, food production.

CHUCKMAN
4 months ago

Possibly, but I am always cautious about claims of peak anything.

It ignores productivity, just as Malthus did.

Technologies for identifying and studying or extracting almost anything you care to mention keep changing and improving.

Look at what our new technologies in the last few years have identified in our universe, just completely overturning established concepts in everything, from black holes to the role of comets and the nature of galaxies.

And remember, three-quarters of earth is covered by water.

New deep-sea mining techniques likely will completely change our view too of mineral wealth and extraction.

Serious AI applied here, too, is likely to generate revolutionary change.

FilastinHuratan
FilastinHuratan
4 months ago
Reply to  CHUCKMAN

Good points. I remember the Club of Rome’s forecasts in the 70s, telling us a lot of natural resources would run out in 30 years. AFAIK, none of that has happened thanks to technological advances.

Anti-Empire