Gold production in South Africa dropped by 19% year-on-year in September, according to a report at Fin24.
This continues a trend of monthly gold mine production drops. South African gold output fell by 15% in August and 15.5% in July.
The country once led the world in gold production. The precipitous drop in output over the last few years could signal an overall drop in global mine output.
Global mine production fell slightly in 2017, the first drop in mine output since 2008. In fact, gold production has generally increased every year since the 1970s. The drop in 2008 was something of an anomaly, as it occurred at the onset of the 2008 financial crisis. The recent slowdown in mine production is more concerning. In fact, many people speculate we may be at or near “peak gold.”
South African gold output saw its biggest drop in over a year in May, falling 16.2% year-on-year. This is another sign that the one-time world leader in gold production could be running out of the yellow metal.
May’s decline came on the heels of a 5.8% drop in production in April. It was the eighth consecutive month of declining output for South African gold mines, according to Pretoria-based Statistics South Africa.
Last May, the head of the world’s largest mining company said we’ve found all of the gold. Goldcorp CEO Ian Telfer told the Financial Times, “we’re right at peak gold here.”
Peak gold is the point where the amount of gold mined out of the earth will begin to shrink every year, rather than increase, as it has done pretty consistently since the 1970s.
You could blow off Telfer’s comments off as hyperbole or the musings of a contrarian except that he’s not the only person in the gold mining industry worried about decreasing gold production. As a recent Business Insider article reported, many of the top people responsible for supplying the world’s gold say we’re running out of the yellow metal.
World Gold Council chief market strategist John Reade recently talked to Commodity TV about the current state of the gold market and what he sees in the future.
Reade cast an optimistic tone, saying the supply and demand fundamentals point toward a healthy, growing gold market moving forward.
Global silver mine supply dropped for the second straight year as industrial demand rose for the first time since 2013, according to the World Silver Survey 2018 produced by the GFMS team at Thompson-Reuters and released by the Silver Institute this week.
There’s been a lot of focus on inflation and interest rates and how they will impact the gold market in the coming months. But gold has two fundamentals going for it that aren’t getting nearly the same kind of attention.
Simple supply and demand.
Gold supply plateaued last year. Global mine output rose just a paltry 5.7 tons in 2017, according to data compiled by the World Gold Council. That represented the smallest increase since 2008.
Gold consumption in China grew 9.41% in 2017, according to information released by the China Gold Association. Gold jewelry demand, especially in poorer regions, helped drive overall demand higher.
The Chinese consumed 1,089 tons of the yellow metal last year. The South China Morning Post called the surge in demand “a big turnaround” after a 6.7% slump in 2016.