Vincent Borg, spokesman for number one producer Barrick Gold has announced, "it's a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year," He continued. "It sort of goes down about one million ounces every year and our forecast is that it will continue to decline despite the higher price" for gold nowadays, he said.
Almost everywhere you look these days, gold deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain.
South Africa, once at the forefront of world gold production, has experienced a 9.3-percent drop in production year-over-year in the second quarter, according to its Chamber of Mines.
"It's just that the assets are not there anymore," Tonya Todd, a spokeswoman for Goldcorp, Canada's second biggest gold mining firm.
Despite this, Barrick and Newmont hope to continue increasing their production of gold next year by anywhere from seven to ten percent but long-term, it is still going to drop overall.
It takes from seven to ten years to start production of a mine Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, explained
“And no significant new discoveries have been found in recent years, despite the higher gold prices and despite higher exploration budgets," said Borg.
This means that the grade of deposits will continue to get less and the average grade of mines will be less and gold will be more expensive to produce as a result.
The global gold mine production is expected to rise by around 3.7 percent in 2009 to near 2,500 tonnes, but this will only satisfy only two-thirds of demand, which is soaring this year to a new high of 3,800 tonnes, doubtless due in no small part to the global financial crisis, according to the World Gold Council.
Historically, gold recycling or the sale of central bank stockpiles made up for supply shortages, however during the latest financial crisis, banks have been buying up gold in large quantities to protect monetary reserves against the weakness in the US dollar and so this is no longer an option.
And since November this year, India's central bank has collected up 200 tonnes of gold from the International Monetary Fund, at a market value for about 6.7 billion dollars.
Amid uncertainty in the stock market, small investors and hedge funds are also coveting gold, driving up demand for the precious metal.
This drop in gold production, combined with the hoarding of gold by China and India and more demand for gold as a hedge and asset protection will certainly serve to increase the price of gold bullion over the coming years. Anything that becomes more scarce always commands a higher price and gold, being already considered highly valuable in these days of economic uncertainty will almost certainly mean a boom in the price of gold bullion.