Growth in global gold mine supply over a 35-year period (1990 to 2024e), we estimate to be at around 2.1% CAGR. This can be spilt into two distinct periods, largely driven by the prevailing gold price.
Over the 15-years from January 1990 to June 2005, the gold price rose a meagre $38/oz Au, or 9.6% in nominal terms, but fell 39.8% in real terms due to inflation over that period. The gold price then jumped 315% over the next six years to August 2011, unsurprisingly, eliciting a ~15% supply response.
Yet, it can be observed that global gold production has plateaued over the past eight years. Although >10Moz Au discoveries in the second half of the 20th Century were relatively common, since then, finding large gold deposits have slowed substantially; with the majority of current mine supply coming from existing operations that have been in production for decades.
Discovery depletion, ceteris paribus, means that the easier-to-find deposits will be located first, with the more difficult later. The latter deposits, as a rule, are usually of a poorer quality than initial operating mines, in that their production costs per unit of output are higher (e.g. gold mines become deeper).
Decreasing discovery investment by major mining houses, may in fact, represent the unpalatible truth that there are limited large gold discoveries to be made globally.
