The specter of peak supply has receded as higher prices encourage producers to spend more on exploration and innovation.
Peak gold production is looking a little more distant. Global supply of the yellow metal has been inexorably approaching its high-water mark, as ore is extracted faster than new discoveries are made.
Mines have been aging fast. A sustained price rally can change that picture, as investors rekindle their enthusiasm for large-scale exploration and technological innovation. Bullion miners’ margins will benefit.
Gold is coming out of a long period in the investor wilderness. Last year marked the biggest annual gain in prices since 2010. It broke through $1,570 last week — the highest in almost seven years.
Gold prices are driven by factors that aren’t always predictable, but there’s certainly scope to go higher, with interest rates low and geopolitical tensions simmering. Holdings of gold in exchange-traded funds, popular with retail investors, are near 2012’s lofty levels. Central banks remain buyers too.
This isn’t a repeat of 2011, when gold cracked a gravity-defying $1,900 per ounce — at least, not yet. The all-time high remains some way off, despite a handful of analysts already pointing to $2,000 gold.
For the rest of this article: https://www.bloomberg.com/opinion/articles/2020-01-16/gold-s-rally-helps-miners-delay-inevitable-peak-in-supply