Gold forecast - South Africa's annual gold production volumes are steadily declining and there are no replacement reserves. Apparently this is a global phenomenon that stretches to most major gold producing regions including Australia, Canada and Peru.
In light of this, a recent report by Goldman Sachs reveals there is only 20 years of known mineable reserves of gold (and diamonds) remaining.
Furthermore, 2015 could be the year gold production peaks, after which steady declines will be realised. This view is supported by many commodity analysts and market reports.
It is common knowledge for example that South Africa’s gold industry has long ago seen its ‘hey day’ production years. The industry is now rapidly maturing and deep level gold mines are not sustainable at depths much greater than they are at present.
According to gold broker GoldCore, discoveries of new, mineable gold reserves peaked in 1995 at around 140 Moz. This followed steady annual increases since 1991 when global discoveries were at around 60 Moz.
In 2013, new discoveries totalled less than 10 Moz.
While this, in part, reflects the severe pullback in gold prices – and hence, profitability of mining – data shows that new discoveries were in decline even as gold prices continued to rise.
Following the 1995 peak, new discoveries have been in a dramatic downward trend. Discoveries rose from 2002 till 2008 along with gold prices.
However, there was a dramatic fall-off in new discoveries from 2008 even as prices surged to record nominal highs in 2011 when one would expect the search for new deposits to have intensified.
It is not just South Africa
Most of the larger gold producing countries, not just Australia, the U.S. and South Africa but also Canada, Peru, Indonesia and others, have all seen production drops in recent years.
China and Russia are the two only large producers to have seen production increases.
The implications of this trend – if the assertion proves to be correct – are manifold.
The ability of bullion banks to manipulate the price of gold downwards on futures markets will be impaired in an era of declining gold production. As China, Russia and other eastern central banks continue to accumulate gold in massive volumes with which to back their currencies it will be highly unlikely that gold prices will be suppressed for much longer.