Sunday, April 5, 2015

MarketWatch: Will the World Run out of Mineable Gold?

This is something to keep an eye on. And it may apply to silver as well even though silver is not mentioned in this MarketWatch article. Of course, there will likely be new discoveries made over time. However, it is less likely that easy to mine reserves will be found meaning new reserves will cost a lot more to extract. This is a fundamental that both gold and silver may do OK price wise in coming years whether we have another major financial crisis or not.

"In another two decades rare commodities may become seriously scarce.
According to Goldman Sachs, the world has about 20 years each of known minable reserves of gold GCJ5, -0.11% diamonds and zinc. Platinum PLJ5, +0.27% copperHGK5, -0.22%   and nickel reserves only have about 40 years or less left.
“The combination of very low concentrations of metals in the Earth’s crust, and very few high-quality deposits, means some things are truly scarce,” Eugene King, European metals and mining analyst at Goldman Sachs, wrote in a recent research note.
“Gold has been used as a measure of wealth for more than 4,000 years, as the ancient Egyptians soon worked out that gold was not only shiny and heavy, but rare,” he said.
All told, their “relatively scarcity and the market’s belief that new discoveries will be limited, is what drives the price of these super rare commodities,” King said.
Making gold rarer still, production for gold may also hit their peak this year."
My added comments: It is very unlikely that silver can continue to be mined for around $16 an ounce for very long. With various sources of demand increasing and reserves getting harder to access, this is really just a math thing over time.

1 comment:

  1. Overall I think mining in general has been pushed into disfavor by environmentalists and politicians, but is an absolute necessity. Bonner ran an article about how coal is the cheapest energy source in the world, and China and India are ramping up their consumption of coal for power plants, while our administration is attempting to penalize the industry. The US has the most coal reserves of any nation. Wall Street has punished mining stocks, both metal and coal, in recent years. But like everything, they shall return strong someday, as they are limited resources.