As we get ready to head into 2023, the gold production collapse will help fuel skyrocketing gold and silver prices.
Because of the holiday schedule there were no audio interviews this week. KWN audios will return shortly. Until then…
Key Inflection Point For Gold
December 19 (King World News) – Otavio Costa: We’re at a key inflection point for the gold industry today.
Due to the overwhelming pressure to adopt the green revolution, there has been a declining interest from miners in deploying capital to gold-focused projects.
Perversely, this is very bullish for the industry.
Some brief history first.
Since the end of the Bretton Woods system in 1971, there have been two major gold bull markets:
A raging one in the 1970s and another substantial one in the early 2000s…
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Among the multiple idiosyncrasies causing the metal price to rise in each of them, one key macro driver precipitated the move higher in both:
A multi-year decline in gold production worldwide.
These contractions had a significant impact on fueling the strength and length of prior gold cycles.
Today, we see the same macro development unfolding.
Global gold production has been falling since 2019 and is likely in the early stages of a new secular downtrend.
New Secular Downtrend For Gold Production
Miners that have traditionally focused on precious metals have been redirecting their capital to battery metals and other mineral resources that comply with the green agenda.
Many gold-focused miners have significantly shrunk their production.
Gold Production Is Mostly Collapsing
Newmont, for example, the largest global gold miner, is merely producing the same amount of gold it did 16 years ago while its reserves are down 24% from their peak in 2011.
These supply constraints magnify the bullish long-term investment case for precious metals.
Although we have seen some outstanding new gold discoveries in the last 1-2 years:
The aggregate number of ounces being added to global reserves has been peripheral compared to prior decades.
It is becoming increasingly challenging to find precious metals.
As a result, the reserves of the top 10 mining companies are down 33% over the last 15 years.
Gold Reserves Are Also Collapsing
Let’s not forget:
We have not seen a new precious metals project become a significant producing mine in a very long time.
1970s Gold Bull Unleashed A Boom In Discoveries
The aftermath of the 1970s gold cycle unleashed one of the most significant exploration periods that we have seen in the history of the mining industry.
Over half a billion ounces of gold were found from early the 1980s to the late 1990s.
In contrast, today:
Not only do mining companies continue to deplete their existing reserves, but the quality of their remaining assets is drastically deteriorating.
The average grade for gold reserves by the top 10 miners in the world has been in a secular decline.
Quality Of Gold Reserves Has Also Collapsed
King World News will have more on this topic later today.
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