vrijdag 28 april 2017

Gold Production Vs. Gold Price

It is very obvious, but when the gold price drops, it 's probably because production is going up. And when the gold price drops too much, production will start to decrease as gold mines will have to shut down their unprofitable plants. Then the cycle turns. Because of lower gold production, the price of gold will go up due to the demand and supply equation.

So we have a negative correlation between gold production and gold price.


Now where do we stand in 2017?

It is said that it will take 20 years on average to get reserves and resources to a producing mine.


So that peak in discovery in 1995 is coinciding with the peak of production in 2015.


So what are the gold production numbers today? We see that gold mine production is starting to fall after 2015. So our correlation theory discovery/production is correct. 2015 is supposed to be the peak production year. If no new technologies appear, we will see a decline in production.



Conclusion: As gold production will fall, the gold price will rise. It's that easy.

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