Gold is a highly demanded precious metal. But it is not an inexhaustible supply, and its stocks should begin to decline in the years to come. Here is what is likely to happen, and the consequences on its course.
Gold, an exhaustible metal
At a time when ecology is on everyone’s lips, humanity realizes one thing: the planet’s resources are not unlimited. We have known for several decades that oil will one day come to an end. But this is also the case for precious raw materials, although we talk about them less often. Gold is one of those resources that one day will be totally exhausted. And variations in the price of an ounce of gold will inevitably be influenced by this reduction in stocks.
Currently, unmined gold reserves are spread across several countries. South Africa is an area from which comes a very large number of ounces of gold. It is also found in mines in Australia, China, Russia and Peru, as well as in the United States. The sources are still far from being exhausted: it is estimated that between 2,500 and 3,000 tonnes of gold are thus newly mined each year. In 2017, the firm Statisa estimated that overall gold reserves worldwide exceeded 52,000 tons. The whole question is therefore to know until when they will last.
Will gold reserves run out?
To estimate when gold will run out, it is necessary to understand when gold mining will have peaked. Experts estimate that global gold production will peak in the next ten years. Some, less numerous, even believe that this point has already been passed. Once this step is taken, the level of gold production will gradually drop.
In the end, production will stop not because there will be no more gold to mine, but because it will no longer be profitable to access it. That is to say, the mines will become too deep, or the gold flakes will be too extensive to justify the operating costs. It is of course impossible to estimate to the nearest year when gold stocks will run out. For some, they will cease to be exploitable in around thirty years, around 2050. Technological advances could make it possible to push back the date even further, by accessing formerly unexploitable veins. But overall, it remains very unlikely that the gold stocks will still be mined after 2075.
Also Read: 5 Things to Know Before Buying Gold
Recycled Gold and Global Stocks
The end of gold production will of course have an influence on its price. When stocks are reduced, and demand remains the same, this will automatically drive up the price of gold. The price of an ounce of gold should therefore accompany this progressive depletion. As this happens, however, we should see the development of another market: that of recycled gold. More and more investors are turning to gold that has already been used (as jewelry, bullion, etc.), since it retains its value by nature. We must also count on the world’s gold reserves: the central banks of the countries of the world have thus amassed a considerable quantity of gold. Overall, this precious metal should therefore continue to circulate and be resold.