It's no secret that the world's supply of physical gold is limited. Gold remains one of the rarest elements in the world, making up about 0.003 parts per million of the earth's crust. A lesser known fact, though, is that gold could become difficult to impossible to come by. Could it happen within your lifetime? Here’s why.
Many gold mines face ongoing production struggles
Stresses on the supply of gold can be attributed to a number of factors, including:
- Less gold being discovered: the amount of gold found by miners has plunged 85 percent over the last decade (Bloomberg Markets)
- Shrinking mine reserves: the amount of known metal that's economically worth mining continues to decrease, with major gold producers' reserves having shrunk 40 percent since 2011 (Bloomberg Markets)
By the end of 2017, some of the largest mines could report production decreases in line with those already experienced in countries around the world. For instance, Thomson Reuters reports a decline in 2016 gold mine output in Peru, Argentina, and Mexico.
- Peru: the Yanacocha mine registered a 29 percent drop in gold output and the Lagunas Norte mine saw a decline of 22 percent
- Argentina: the Veladero mine saw a decline of 10 percent and the Cerro Negro mine reported a 28 percent drop in gold production
- Mexico: the Penasquito mine saw a 46 percent drop in gold production
“Mine supply will peak in 2019 and keep falling through at least 2025,” anticipates BMO Capital Markets. Which countries and mines will make the list at the end of 2017?
A supply catch is coming, but there's a catch. “Annual mine output totals less than 2% of all the gold that's thought to have ever been produced [and] most of that gold is sitting in vaults or in jewelry form.” That means it's already been claimed. As gold increases in scarcity, will people who already hold gold let it go so easily?
Why buy gold? So many people already have, whether because they view it as a store of wealth, a safe haven, a portfolio diversifier, or a source of profit potential. Download U.S. Money Reserve's free Gold Information Kit for an in-depth answer to the age-old question, why buy gold, and call 1-844-307-1589 to claim your precious metals before it's too late.
Meanwhile, other gold producers are on the verge of crumbling
There's one big gold story that few people are talking about: the demise of South African gold mining.
After more than a century as the world's top gold producer, the country has slipped to No. 7 over the past decade. In 2006, the country put out 8.75 million ounces of gold. Compare that to 2016, when their gold production declined to a mere 4.5 million ounces, notes Business Insider.
If gold mining companies in South Africa can't incorporate newer technology to dig deeper and more efficiently, “the industry will be dead by 2033,” says Near Froneman, the chief executive officer of Sibanye Gold. If this happens, the world could lose a top gold producer—for good. After South Africa, who's next?
South Africa isn't the only country struggling with mine production issues. In addition to wrestling with the rarity of gold, some gold producers can't get over social hurdles like labor shortages and government regulations.
Take a look at what's happening in Tanzania, the fourth largest gold producer in Africa. In July 2017, Tanzania's President threatened to shut down all gold mines in the country if mining companies put off resolving back tax disputes, reports CNBC. Challenges such as these could prove truly volatile for the world's supply of gold, especially while they remain underreported and unexpected.
So much gold has already been mined
Current estimates from the World Gold Council (WGC) suggest that around 187,200 tons of gold have already been mined, two-thirds of which were mined in the last 70 years or so. Pack this gold together and you’ve got a cube that measures about 21 meters on each side. A cube this size would fit comfortably in the middle of a baseball infield.
Much of the gold that has been mined throughout history is still existence, continuously being recycled, but this is changing. Gold is increasingly put to work in nanotechnology in medicine, engineering, and environmental management where it is used in such small quantities that it may no longer be economical to recycle it. Jewelry, for one, already accounts for 50 percent of current global gold demand, reports the WGC. How much gold does that leave for other applications? New and innovative uses for gold are being discovered every day, uses that could jeopardize your ability to buy gold in the future.
As far as the amount of gold that remains in the earth, the U.S. Geological Survey estimates that there are about 57,000 tons left to be mined. That may sound like a lot, but compare it to the amount of gold that’s already been mined. What you’re left with is a cube that’s about 6 meters on each side—a cube that would stand about as tall as an adult giraffe. Still feel like there’s plenty of gold left to go around with less being discovered, less being recycled, and so much already claimed?
Can you afford to wait until it's too late?
Iron rusts. Aluminum is flimsy. Lead and copper corrode. As far as natural elements go, gold is among the only ones that can stand the test of time. That's one reason, among many, that gold has been used as a currency and a store of wealth since the beginning of recorded history.
The supply of gold can't last forever, especially given recent stressors is the mining industry. That means that when they need it most, your children—and potentially their children—may not be able to buy gold as easily as you can now. Think about it. Has there ever been a wrong time to own gold? Watch Gold 101 below and call 1-844-307-1589 to take your gold knowledge to the next level. Account Executives are standing by to answer your questions and provide you with a free one-on-one consultation.