SNL Metals Economics Group, one of the most reliable sources for information on the global mining industry, tracks the discovery of gold deposits and precious metals. According to SNL, major gold deposits can be classified by containing at least two million ounces. Now, let’s consider the reduction in key gold deposit findings over the years:
From the chart below, twenty-two (22) main deposits were found in 1995, six (6) found in 2010, one (1) in 2011 and nothing in 2012. This graph trumpets the notion that gold supply is running out fast.
While the reduction is obvious, the possibility that there could be massive gold deposits under the arctic circles has been suggested. It is believed to be masked underneath exceedingly deep, covered layers of solid ice and rock. The presence of huge layers of molten gold close to the earth’s core has been predicted as well. However, we can safely assume that it would take a very long time to begin any extraction of gold from that depth.
Records show that gold production may have climaxed more or less in the year 2,000, while an average decline or reduction of one million ounces every year thereafter has been trending.
How Does This Affect Gold Prices?
Investing in gold is a good investment, but in the long run, it might be a great investment.
The high demand for gold has been sustained over the past five years, and with a rapidly diminishing supply, the value of gold will ultimately increase.
Keep in mind that scarcity elevates value. Basic economics dictates that an increase in demand works well with a diminishing supply which will increase its value. This is the position that gold enjoys at the moment.
Gold has a potential to struggle in the short term, just like any other commodity, but a depleted gold supply will definitely lead to one result – elevated prices. There is needed for the world to pay drastic attention to the search for more gold to address an ultra-scarce situation
In other words, if we consider that prices of gold have already increased by well over 3,000% in the last four and half decades, at a period when gold deposits were being discovered at a regular rate, and demand much lower than it is at the moment, it could be comfortably predicted that value of gold would drastically increase in the long-run.