The world gold production in 2011 was 2700 tons of gold (estimated by the USGS). Gold production has again reached its peak in 2001 (2 600 tonnes of gold). The question is whether production will again stagnate at this level.
I. Gold production in the world in 2011.
Among the eight largest gold producers 'historical' in 2011, six have increased their production and two that fell.
1° Gold production in China grew 10 tons of gold (+2.9%), from 345 to 355 tons of gold.
2° Gold production in Australia increased by 9 tons of gold (+3.45%), 261 to 270 tons of gold.
3° Gold production from the U.S. increased 6 tons of gold (+2.6%), it increased from 231 to 237 tons of gold in 2011.
4° Gold production in Russia increased by 8 tons of gold (+4.17%), it increased from 192 to 200 tons of gold.
5° Gold production in South Africa increased by 1 tonne gold (+0.53%), it increased from 189 to 190 tons of gold.
6° Gold production in Peru fell 14 tonnes of gold (-8.5%), it increased from 164 to 150 tons of gold.
7° Gold production in Canada increased by 19 tons of gold (+20.9%), it increased from 91 to 110 tons of gold.
8° Gold production in Indonesia fell by 20 tonnes of gold (17%), it increased from 120 to 100 tons of gold.
Gold production of these eight producers 'historical' increased from 1 593 to 1 612 tonnes of gold, an increase of 1.19%. At the same time, the world gold production increased by 140 tonnes of gold, or +5.47%. These are, once again, the small gold-producing countries that experienced the strongest growth. Their gold production increased by 121 tonnes of gold, or +12.5%.
II. Atomization of the world gold production.
The share of small gold producers increased since the beginning of the decline in gold production in South Africa in the early 70s, she rose from under 10% in 1970 to over 40% in 2011. But these small gold producing countries that are over a hundred just reach the level of production (1088 tons of gold) of South Africa from 1969 to 1970 (1,000 tonnes of gold). This fragmentation of world gold production has important consequences in terms of production costs. It was much easier and rational to produce 1,000 tons of gold on the Witwatersrand, in a 100 km radius around Johannesburg (economy of scale, staff, etc.) than on the entire globe with a scattered mining everywhere. Today, production of gold has turned into Mozaique globally, it produces gold, but in smaller quantities in numerous mines far from each other.
To summarize: the continually rising price of gold for 10 years has allowed the opening of many small gold mines around the world. They are often less profitable and therefore in a more precarious situation. They are much more sensitive to changes in gold prices and rising production costs.
III. Prospects for production and gold prices.
In 2010, about gold production in 2009, I indicated to you that gold production would likely increase 2, 3 years. In summary, this increase was rooted in the rising price of an ounce of gold, or temporary stagnation in production costs, the increase in demand (2008 crisis) and in producing polymetallic (increase in demand for industrial metals: copper, zinc).
Today, at horizon 1, 2, 3 years we should have an opposite phenomenon which should lead to the start of the decline in world gold production.
Unlike 1980, gold production instead of continuing to increase for 20 years to offset the decline in gold prices (this is not technically possible), should fall more or less rapidly. According to economic models "classic" the price of gold would collapse because of the long term sustained increase in gold production for at least a decade (yes, really).
Do not panic! Here things will go differently (nothing's the same since 1998-2001). With the decline in gold prices, increased production costs (all investments lead to oil ...) gold production, instead of increasing to compensate for falling prices should drop quickly (it will be a anomaly). So fast that it will have the effect of a cardiac defibrillator on the falling price of an ounce of gold. For today, structurally, global gold production is no longer the same and will not react the same way as in the past, due in particular to the fragmentation of production (is a shortcut, because the situation is "a bit more complex").
To summarize in three points :
1 ° The current drop in the price of gold (a consequence of the increase in world gold production from 2008 to 2011) is normal, temporary, or even desirable (we avoid a bubble).
2 ° The decline in production that will follow in one, two, three years is an anomaly, as usually expected to increase sustainable production and depress investors for one to two decades.
3 ° Then the decline in world gold production will cause a new wave of rising gold prices (I'll post a topic in due course).
If you are an investor, you wait. If you are a responsible mining you protect yourself from rising energy prices (and let them know your shareholders) will be the No. 1 enemy of your margins in the coming years ...
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Dr Thomas Chaize