APR 5, 2018
Since there was a planet Earth, there was a fixed supply of gold on it. And the easier-to-find portion of it has largely been hauled out of the ground already.
With exploration costs ramping (and the increasing likelihood that these expenses will be incurred and net zero new gold found), world gold supply is falling at a time when the next gold price flight-to-safety trade is likely just around the corner.
Bullion prices are set to climb because there’s been a lack of exploration and the global industry isn’t replacing the reserves it’s been mining, according to Stephen Letwin, chief executive officer at Iamgold Corp.
“Gold has a much higher probability of moving north as opposed to south,” Letwin said in an interview at a mining conference in Hong Kong on Thursday. “I’ve been around a long time; when you’re in an industry that’s not replacing what it produces, eventually, the price has to move up.”
The producer-funded World Gold Council has estimated that world supply may have peaked, while Frank Holmes, chief executive officer of U.S. Global Investors Inc., said this week that mine supply topped out in 2017 or will do so this year.
Combined with understated inflation and strong demand from China and India, this could help boost prices to $1,500 an ounce by the end of the year from about $1,327 now, according to Holmes.
ORIGINAL SOURCE: Gold Price Seen ‘Moving North’ as World Fails to Replace Output by Ranjeetha Pakiam at Bloomberg on 4/5/18