The Overwhelming Evidence For Peak Gold


Along with the surging interest in gold, there’s been a lot of talk about so-called “peak gold,” this idea that the world has, or will soon near, its maximum level of annual gold production, and then enter a permanent downward slope.

The whole idea of any “peak” substance started in oil, but believers in it — many of whom are resource pessimists or Malthusians — see the same phenomenon elsewhere.

See the evidence it’s happening in gold >>

Over at The Oil Drum: Europe, Louis de Sousa has put together an fascinating presentation on peak gold, and the evidence that gold production is on a permanent decline globally.

He writes:

For long, I thought that gold production was different from fossil fuel production, because gold exploration has no energy limit, only cost. Gold concentration can vary largely. The contours are uncertain and the limit (cutoff) is an economic cutoff, whereas crude oil deposits are discrete and the concentration is either almost 100% (forgetting water produced with the oil) or 0%. However, oil supply (to satisfy oil demand) includes much more than crude oil or bitumen: natural gas liquids, refinery gains and other liquids from coal or biomass. Unconventional oil is more limited by the size of the tap (speed of extraction) than by the size of the tank (amount of resources).

Gold is extracted in mines at about 4000 meters deep, while coal reserves for instance are limited to about 1800 meters deep and onshore because of EROI constraints (waiting for a breakthrough on in situ gasification). But looking at the problems in South Africa (which for long was the main producer), it appears now that diminishing grade and high energy needs will set the limit. The world’s main gold mine is gold in the sea and no one is even thinking of that!

As a retired oil and gas explorer (geologist/geophysicist), I am very interested in minerals, but I know very little about gold mining. (I did try to pan for gold in Australia.) I have gathered all that I could find on the web, to present the main facts about the main producing countries.

I found that little reliable historical data exists. The main source of production information since 1933, on a country-by-country basis, seems to be the annual yearbooks of the USGS. Unfortunately, some of the amounts shown are not correct even in more recent editions, because past wrong estimates (especially for the FSU) were not corrected. Data for China is not considered as certain as the data from other countries. However, the USGS provides good maps of the country’s gold mines.

Now, see the evidence >>

In most countries, the production trend is down. That's really the case in #1 gold producer South Africa, where production is down violently.

In addition to South Africa's decline in production, the quality of its gold is also in decline.

Ore quality is extremely important, because as it goes down, the level of waste and energy required soars

Here's another look at the South Africa peak

It's not just South Africa, here's the estimated production model for Ghana, also a major producer

Thanks to a major discovery in the 1980s, in Nevada, the US enjoyed a second peak

But again, in the US, gold quality is heading downwards, and is close to the feasible limit of economic extraction

Australia is expected to flatline toon

In Canada, again, we see a sharp deterioration in gold grade

Brazil, again, is the same story

China's production peak is coming very soon

Bottom line: when you tally up all of the major countries, the production peak was in 2001

Now don't miss:

If this makes you really bullish on gold, don't miss 11 Ways To Play Gold >>

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