Production Headwinds Provide Strong Support for Future Gold Prices

Major gold miners face a dilemma - robust demand for their product, but question marks over how they will meet demand. Annual gold production is currently running at record levels, but will it be able to sustain itself - given slashed exploration budgets, falling levels of new discoveries and declining reserves? It's little wonder that market watchers like BMO Capital Markets anticipate that mine supply will peak during 2019, then keep falling through to at least 2025. Randgold Resources' CEO Mark Bristow, an industry veteran, is of a similar view. In the past, new technologies were able to keep old deposits going longer and make previously uneconomic ones viable. However the industry is not finding as many new deposits as they need to in order to maintain current production levels. Although we can expect incremental technological improvements in processing, mining, and exploration, there is nothing revolutionary on the horizon. Reserves from aging deposits are not being replaced by new discoveries, a situation exacerbated by rising exploration and development costs, as well as development hurdles like sovereign risk and project financing.


Gavin Wendt
Founding Director
MineLife

Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.