Gold has been a standout performer in 2024, buoyed by increasing demand from central banks and retail investors, leading to multiple record highs. However, analysts warn that the yellow metal’s supply could be jeopardized due to a lack of significant discoveries in recent years.
According to a report from S&P Global’s analyst Paul Manalo, only five major gold discoveries have been made since 2020, amounting to a total of 17 million ounces (Moz) of gold. S&P’s annual review of major gold discoveries shows that from 1990 to 2023, 350 deposits were identified, containing a combined 2.9 billion ounces of gold in reserves, resources, and past production. A “major discovery” is defined as one containing at least 2 million ounces.
While the overall number of discoveries and total gold continues to grow, Manalo noted that most of the newly added assets were found decades ago and only recently met the criteria of being considered major. “Since 2020, only five major discoveries have been made, contributing just 22% of the additional 79 Moz reported in the 2024 update,” he explained.
Challenges in Discovery and Production
Manalo highlighted that recent discoveries are becoming increasingly scarce and smaller, averaging 3.5 Moz, compared to an average of 5.5 Moz from 2010 to 2019. Alarmingly, none of the discoveries made in the last decade have entered the top 30 largest gold finds, reinforcing concerns that the industry’s focus on older deposits limits the potential for finding substantial new sources.
“While it’s important to recognize that reserves and resources can grow over time, the recent lack of quality discoveries poses risks for future gold supply,” he added.
Manalo forecasts that gold supply will peak at 110 Moz in 2026, primarily driven by increased production in Australia, Canada, and the U.S. However, he predicts a decline to 103 Moz by 2028 as production from these countries decreases.
Despite these challenges, there is hope on the horizon. S&P has identified 176 initial resource announcements totaling 79 Moz of contained gold, though only 44% of these announcements are from new greenfield assets, with the rest being expansions of existing projects. “The increasing number of announcements is encouraging for an industry that has faced a decline in significant discoveries,” he stated.
Exploration Budgets and Future Outlook
Manalo noted that the rising price of gold could help improve the outlook for discoveries, as it allows for increased exploration budgets. Since 2017, annual gold exploration budgets have more than doubled, reaching a peak of $7 billion in 2022 after hitting a low of $3.3 billion in 2016. Although budgets fell in 2023 due to tighter financing conditions, they remain elevated compared to previous years.
Between 2017 and 2023, these higher budgets resulted in an average of 42 announcements annually, totaling around 24 Moz of gold each year, contrasting with the previous average of 30 announcements and 13 Moz from 2013 to 2016.
“The future of gold supply is uncertain,” Manalo concluded. “The focus on older assets has hindered the discovery of new major deposits, but the uptick in exploration budgets since 2017 offers a glimmer of hope.”
The Reality of Peak Gold
Rick Mills, editor of Ahead of the Heard, cautioned that “peak gold is already here.” He argued that the depletion of resources necessitates gold exploration companies to discover new deposits to meet rising demand, which currently outpaces supply.
In 2023, the market saw a demand for 4,448 tonnes of gold against a mine production of only 3,644 tonnes, resulting in a deficit of 804 tonnes. Mills noted that recycling 1,237 tonnes of gold jewelry was necessary to meet this demand, indicating ongoing tightness in the gold market.
“This is our definition of peak gold,” he emphasized. “If the gold mining industry cannot produce enough gold to meet demand without recycling jewelry, then the peak gold narrative remains intact. Despite tracking this trend since 2019, we have yet to see a substantial change.”
Mills highlighted several factors contributing to this pessimistic outlook, including the ongoing economic tensions between the U.S. and China, particularly through tariffs. He expressed concern that the major mining companies are primarily exploring their existing properties rather than seeking new mines, with junior mining companies—key players in discovering new deposits—facing financial challenges that inhibit their operations.
“The industry’s current strategy involves mining around existing deposits rather than finding new sources,” he stated. “The success of the mining industry hinges on the ability of junior resource companies to discover new deposits, which the majors can then acquire and convert into mineable reserves.”
Without sufficient financing for junior companies and a focus on exploration, Mills warned that the developed economies of the western world face significant risks regarding supply security for critical metals. “Without a safe and secure supply of these resources, and without the technological capacity to produce essential components, the situation becomes dire for developed economies,” he concluded.
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