Will We Still Have Underground Gold In 2032?

by: Arie Goren

According to the U.S. Geological Survey's 2012 report, the aggregate unmined known reserves of the entire world's gold mining companies is equal to 51,000 metric tons. Considering 2011 mine production of approximately 2,700 tons, it means that there is underground gold left for only another 19 years. However, if that were the case, gold prices should have soared into the sky.

The best estimate at the end of 2011 was that around 165,000 metric tons have been mined in all human history, and more than half of humanity's gold has been extracted in the past 50 years.

Source: data USGS chart

It is true that the world's richest deposits are being depleted in an accelerated rhythm, new discoveries are relatively rare, it is difficult to find gold in commercial quantities, and it also takes time, typically 5 years, and plenty of money to bring mines into production. Nevertheless, while examining USGS's reports since 1995, we can see, as presented in the chart below, that although each year about 2,500 tons of gold are being mined, gold reserves are left unchanged. It means that new discoveries and the development of old mines take place at the same pace as the total mine production. Hence, it seems like 20 years from now gold reserves will still be the same.

We still recommend buying gold now but due to the reasons explained in our post time for gold, but not because of fear that there will be no underground gold left 20 years from now.

Source: data USGS chart

ETFS for gold traded on NYSEArca:

  • SPDR Gold Shares (NYSEARCA:GLD)
  • Sprott Physical Gold Trust ETV (NYSEARCA:PHYS)
  • ETFS Physical Swiss Gold Shares (NYSEARCA:SGOL)
  • ETFS Physical Asian Gold Shares (NYSEARCA:AGOL)
  • iShares Gold Trust (NYSEARCA:IAU)
  • PowerShares DB Gold (NYSEARCA:DGL)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.