Barrick Gold Confirms We've Reached 'Peak Gold'

As I pointed out in September, there are strong arguments that we have "peak gold" - in other words, that the relatively easy-to-reach gold supplies are gone, and so supplies are getting more and more expensive to locate and extract.

Now, the world's biggest gold producer - Barrick Gold (ABX)- is saying the same thing:

Aaron Regent, president of the Canadian gold giant [Barrick], said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.

"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.

For a thorough big picture analysis on gold, see this.

Comments

[User 283977:]

Would an event like peak gold start off an acquisition binge by mature gold mining companies?

Nov 12 12:38 PM

[liveoilfree:]

Peak gold has more reality than peak oil, because we can't make gold from something else, while we can make oil from coal, natural gas, peat or even CO2 in the air -- after all, plants have been doing it for biliions of years.

However, I expect biological harvesting of the gold in seawater to occur at some time, wherein GM bacteria secrete it.

Nov 12 12:39 PM

[Gtarras:]

this ironically will probably mean much much lower prices for gold. the main problem with gold as a currency is its limited amounts, which restricts golds flow and hampers growth. if the world is out of new gold, there will be even fewer reasons to use it as currency. other than that, gold serves no useful purpose to humans. short gold.

Nov 12 12:55 PM

[Dzog:]

I most definitely disagree.
The point is that, over countless millennium, precious metals (and in particular, gold), have served as a store of value, wealth and so on…

What may likely happen is that kilos and ounces of gold will be melted down to grams where upon, they may be ultimately exchangeable for silver (as gold prices find a resting place much/much higher).

What people will not want is any paper currency in the future (watch the US default on its debt within five years – we’ll be seeing inflation as the Germany did in the 1920s and a dollar DEVALUATION) unless, there is something to back the paper (i.e. oil, gold and labor units – see Ithaca dollars).

Such being the case, one might consider owning currencies like NOK, AUD or even the BRZ (Brazilian Real) the latter having discovered the largest proven oil reserves in the last seven years. The same goes for Norway too – although it is currently under dispute. ALL THREE ARE RICH IN NATURAL RESOURCES.

I believe that we will return to the good old days prior to the “Nixon Shock” (see Bretton Woods system on Wikipedia) ending convertibility between US dollars and gold – where the dollar ceased being pegged to gold and that’s when the out of control dollar printing really got out of control.


On Nov 12 12:55 PM Gtarras wrote:

> this ironically will probably mean much much lower prices for gold.
> the main problem with gold as a currency is its limited amounts,
> which restricts golds flow and hampers growth. if the world is out
> of new gold, there will be even fewer reasons to use it as currency.
> other than that, gold serves no useful purpose to humans. short gold.

Nov 12 01:57 PM

[User 371678:]

Gtarras said:
" this ironically will probably mean much much lower prices for gold."
"gold serves no useful purpose to humans"

That would be the first time that reduced supply led to reduced price. You must have been absent when your teacher explained the supply/demand curve. No useful purpose? That's slapstick, right?

Nov 12 02:07 PM

[flowerguy:]

Fact: There wil be continued production
Fact: There will be increasing $$ flowing into exploration and development (remember when we were told we were running out of oil!?)
Fact: reduced availability only drives up prices (think of any famous work of art here
Fact: There are 200,000 billion dollars of investable assets floating around and only about 800 billion dollars in available gold (today).

FEAR of falling value in most paper currencies is driving wealth into things of real value...gold stands to benefit over the long term ...this just adds to the updside pressure.

Nov 12 05:11 PM

[Roger Knights:]

"if the world is out of new gold, there will be even fewer reasons to use it as currency."

It needn't be in circulation as currency to be useful, but only to be in a central bank's reserves, partially backing the currency. It stores a lot of value in a limited volume, so it's an excellent (easily stored and guarded) store of value.

"short gold."

For the past year I've been responding to comments like this with a plea to the writers to follow their own advice, and see where it gets them after a year. (My most notable exchange was with a columnist named Alan Brochstein, who went short at about 850. about eight (?) months ago.)

Nov 12 10:38 PM

[rick flair:]

total fools who utter things like 'short gold' have a tiny economic iq to start with, and are almost invariably liberals or socialists of the hysteric type....there'yr all the same...money losers for the last 11 years, just fade em...

Nov 12 11:05 PM

[Rick Krementz:]

"Peak gold" really does not make sense for a non-fuel. Fossil fuels are consumed, so when they are gone, we need to extract more, or find substitutes. No one is hoarding oil from 1900. When oil is gone, it is really gone, burned into CO2.

All the gold ever mined is still here (except for the trivial amounts shot into space). We still have gold from 3000 BC.
The refined gold supply will always increase, but probably not as fast as demand (population growth).

The amount of gold dissolved in the oceans is greater by about an order of magnitude than all the gold mined in history. (It is far from economic yet, so don't rush out and invest). We are not "running out" of gold, although we are running out of ore than can be processed for less than $100 per ounce. So what?

Nov 13 07:54 AM

[the humble ...:]

The title of this blog is misleading in that it implies that gold has peaked in price. If the easy to reach gold is no longer available then I suspect that to the contrary, gold is very far from having peaked.

Nov 13 09:06 AM

[naidle:]

This doesn't make sense.


On Nov 12 12:55 PM Gtarras wrote:

> this ironically will probably mean much much lower prices for gold.
> the main problem with gold as a currency is its limited amounts,
> which restricts golds flow and hampers growth. if the world is out
> of new gold, there will be even fewer reasons to use it as currency.
> other than that, gold serves no useful purpose to humans. short
> gold.

Nov 13 01:02 PM

[mr. blue:]

Rick Flair:
I am a liberal. All liberals are not bad investors (and Some of us even own guns). I have been long gold since last June .
I believe short gold (long term) is a big, big mistake.
Your simply generalizing too much. Also, you can play the ups and downs if you like with gold and be smart about it using stops, but, that's not for me. Hard assets are what I want to be in for the long term. I live in a very conservative area and I know plenty of conservative neo-cons who simply have faith in God that it will all work out. They think the mighty USD won't fail cause Gods on our side and it says we trust in him on the currency so that should do it right??? You probably know people like this too. These folks are nearly all conservative, and most definitely not liberal!
It is unfortunate that Obama has continued the policies of W and even hired the same people who got us into this mess to fix it. I disagree with Obama's economic policies, but, they are no worse than the neo-con Bush and Co. Both administrations will have damaged our country's future, I just hope it won't be irreparable.
Long gold
Long energy


On Nov 12 11:05 PM rick flair wrote:

> total fools who utter things like 'short gold' have a tiny economic
> iq to start with, and are almost invariably liberals or socialists
> of the hysteric type....there'yr all the same...money losers for
> the last 11 years, just fade em...

Nov 13 03:26 PM

[realold:]

Are you really suggesting that individual gold molecules are floating around in the ocean? This seems a little far fetched. As far as I know, gold does not combine with other elements, so would it be "harvested" one molecule at a time and then these plants that captured the gold (God knows how) then accumulated, processed, etc.? This sounds far fetched as well. What science are you basing all this on?


On Nov 13 07:54 AM ricardoRI wrote:

> "Peak gold" really does not make sense for a non-fuel. Fossil fuels
> are consumed, so when they are gone, we need to extract more, or
> find substitutes. No one is hoarding oil from 1900. When oil is gone,
> it is really gone, burned into CO2.
>
> All the gold ever mined is still here (except for the trivial amounts
> shot into space). We still have gold from 3000 BC.
> The refined gold supply will always increase, but probably not as
> fast as demand (population growth).
>
> The amount of gold dissolved in the oceans is greater by about an
> order of magnitude than all the gold mined in history. (It is far
> from economic yet, so don't rush out and invest). We are not "running
> out" of gold, although we are running out of ore than can be processed
> for less than $100 per ounce. So what?

Nov 13 05:55 PM