Precious Metals

Report examines next 30 years in gold

Gold's performance in the mining, investment and supply and demand sectors are examined through 2048 by the World Gold Council in a newly released report.

Images courtesy of World Gold Council.

Activity in the gold market over the next three decades is the focus of a just-released 51-page report from the World Gold Council titled Gold 2048: The Next 30 Years for Gold.

Gold production has doubled over the past 30 years, but few believe that trend will continue, says Mark Fellows, head of mine supply analysis for precious metals consultancy Metals Focus.

By 1987, according to Fellows, 60 percent of mine production globally was executed by South Africa, the United States, Australia and Canada. Today, that demographic has dropped to just 30 percent of overall gold output.

China, in 2016, produced 464 tons of gold, 60 percent more than second-place Australia, with third-place Russia at 274 tons.

Fellows says that, if current mining rates are maintained over the next 30 years, by 2048 another 97,000 tons of gold will be added to current stocks.

Significant capital investment will be required to bring the next generation of gold mines into production, according to Fellows.

“At present, it is estimated that an incentive price of around US$1,500 per ounce is required to maintain global production at current levels,” Fellows writes

This assumes the following, he says:

• a U.S. $75 an ounce average discovery cost for gold reserves through exploration (MinEx Consulting, 2016).

• an average capital cost (on a per ounce basis) to build a mine of U.S. $200 an ounce produced life-of-mine.

• the 90th percentile of the gold mining industry’s all-in sustaining costs sits at U.S. $1,150 (Metals Focus – Gold Focus 2017)

• a return on investment of 15 percent, which could be considered at the lower end of acceptability, especially for less politically secure countries.

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