The Last Days of Gold
Gold is one of the rarest elements in the world and since the beginning of recorded time has been used as a form of currency. The precious metal constitutes about .003 parts per million of the earth’s surface. Translated into time this would be less than thirty seconds every two years. All of the gold ever mined in the history of civilization would only fill an Olympic size swimming pool when melted down.
Fiat currencies can easily be printed but alchemists have yet to recreate gold, making the only way to acquire more is to dig. It is increasingly difficult to find mine-able gold and according to Goldman Sachs analyst, Eugene King, we only have twenty years of known mine-able gold reserves left. Exploration for gold continues and it is imperative to understand that King’s statement includes the word “known” meaning that 2035 may not necessarily mean the end of gold. Regardless, finding and exhuming gold will become more expensive because of more sophisticated tools and technology like 3D seismic imaging. The time between discover and production is also increasing because of the required feasibility assessments and compliance licenses.
Some analysts believe that gold production peaked in 2015 and expect global production to fall 3 percent in 2016. This according to Thompson Reuters, is the beginning of a “multiyear downtrend.” Projects expected to come online in 2016 are more modest and of a lower grade than in previous years. This likely means that there will be fewer and fewer major discoveries of more than a million ounces.
Space may be the next frontier in precious metal exploration because our reserves are quickly depleting on Earth. President Obama signed legislation that approves commercial mineral extraction on asteroids and the moon. Asteroids are believed to contain precious metals and minerals worth trillions of dollars. Is the outlook for gold and precious metals so bleak that we are forced to look to the heavens for help?
Jim Rickards in his book, The New Case for Gold, puts gold at $10,000 an ounce and GoldMoney founder James Turk believes gold will actually move closer to $12,000 an ounce. It is interesting to think of gold increasing nearly ten-fold in less than twenty years but if supply for gold continues to be limited and demand remains the same or increases, it is an economic certainty that the price of gold will go up.