Gold has enjoyed a stellar performance in 2024, with surging demand from central banks and retail investors pushing the precious metal to record highs. However, the long-term outlook for gold could be uncertain, as one expert warns that the supply of gold is at risk due to the scarcity of significant new discoveries.
A report from S&P Global analyst Paul Manalo reveals that since 2020, there have only been five major gold discoveries, totaling 17 million ounces (Moz) of gold. This signals a troubling trend for the future of gold supply, as fewer large deposits are being found.
Decline in Major Discoveries
S&P’s annual analysis of gold discoveries shows that, from 1990 to 2023, 350 deposits were discovered, containing a total of 2.9 billion ounces of gold in reserves, resources, and past production. A major gold discovery is defined as one containing at least 2 million ounces.
Manalo emphasized that while the number of discoveries continues to grow, the majority of these assets were found decades ago, only recently meeting the criteria for major discovery. Since 2020, the five major discoveries represent just 22% of the additional 79 Moz of gold added to S&P’s analysis in 2024.
Manalo noted that recent discoveries are both scarce and smaller in size. On average, discoveries from 2020 onward contain 3.5 Moz, compared to 5.5 Moz from 2010 to 2019. He added that none of the discoveries made in the past decade have ranked among the largest 30, supporting the view that the industry’s focus on older deposits limits the potential for significant new finds.
Gold Supply Challenges Ahead
Manalo expressed concerns about the long-term gold supply, stating, “The lack of quality discoveries in recent years does not bode well for the future of gold supply.” He highlighted that gold supply is expected to peak in 2026 at 110 Moz, driven by production from key gold-producing countries such as Australia, Canada, and the U.S. However, supply could decline to 103 Moz by 2028 due to a drop in production from these nations.
Although some hope remains for supply growth, S&P has identified 176 initial resource announcements totaling 79 Moz of contained gold. Yet, only 44% of these announcements come from greenfield assets, while the rest are from newly discovered deposits within existing projects, underscoring the industry’s preference for exploring known assets.
Exploration Budgets Offer Optimism
Despite the challenges, rising gold prices could fuel further exploration. Since 2017, annual gold exploration budgets have more than doubled, reaching a peak of $7 billion in 2022 after hitting a low of $3.3 billion in 2016. Although budgets decreased in 2023 due to tighter financing conditions, they remain higher than previous years.
Manalo pointed out that between 2017 and 2023, higher budgets resulted in an average of 42 announcements annually, each averaging 24 Moz of gold. In contrast, during 2013 to 2016, there were only 30 announcements per year, with an average of 13 Moz.
“The future of gold supply is mixed,” Manalo concluded. “While recent discoveries have been fewer and smaller, the increase in exploration budgets brings some optimism, as the number of initial resource announcements grows.”
Industry Warnings: “Peak Gold Is Already Here”
Commenting on Manalo’s findings, Rick Mills, editor of Ahead of the Heard, warned that “peak gold” has already arrived. He emphasized the difficulty of meeting the current demand for gold, with mine production failing to keep up. In 2023, gold demand reached 4,448 tonnes, but mine production lagged at 3,644 tonnes, leaving a deficit of 804 tonnes. The shortfall was only met by recycling gold jewelry, according to the World Gold Council.
Mills criticized the current exploration efforts, noting that many major mining companies are only focusing on existing properties rather than searching for new deposits. He stressed the importance of junior exploration companies, which play a critical role in discovering new gold resources that major miners can develop. However, he pointed out that these companies are underfunded, often struggling to secure the necessary financing to explore new areas.
“Without well-financed juniors, the mining industry will face severe challenges in securing new deposits,” Mills said. “The industry’s current approach of revisiting known deposits will not be enough to meet future demand.”
Mills further argued that developed economies are at risk if they continue to rely on competitor nations for the supply of critical metals and associated technologies. He concluded by stressing the need for increased investment in junior exploration companies to address the looming gold supply shortfall.
As gold continues to shine in 2024, the long-term challenges facing its supply cannot be ignored. With fewer major discoveries and increasing demand, the future of the gold market remains uncertain, though rising prices and increased exploration budgets offer a glimmer of hope for the industry.
