Why Gold supply struggles could drive prices higher [Video]

Mike Maharrey opened this week’s Money Metals Midweek Memo with an anecdote about metal detecting—a light segue into a serious look at gold scarcity. He recounted the 1979 discovery of the Golden Beauty, a nearly 10-pound gold nugget found in Western Australia, now up for auction with an opening bid of $400,000. At current gold prices, the nugget’s melt value is closer to $481,800.

But such discoveries are rare. In fact, experts say that even finding a one-ounce gold nugget is harder than finding a five-carat diamond. This underscores gold’s enduring scarcity—a defining feature that gives it monetary value, in stark contrast to fiat currencies that can be printed at will.

The finite supply of Gold

To date, humanity has mined approximately 216,265 metric tons of gold, according to the World Gold Council. Two-thirds of that total has been extracted since 1950 thanks to improved mining technologies. Though this number sounds substantial, if melted into a cube, it would only measure about 22 meters on each side—not even half the length of an Olympic swimming pool.

In physical terms, all the world’s gold stacked as 400 kg bars next to the Statue of Liberty would only reach her waist.

Flattening mine production

Global gold mine output has plateaued since 2018, raising questions about whether the world is approaching “peak gold”—the point where annual gold production begins to decline.

In 2023, miners produced 3,661 metric tons of gold—a record, but only three tons higher than the 2018 record. After rising consistently for decades, output dipped 1% in 2019, the first absolute decline since 2008.

Analysts point to diminishing returns in mining: declining ore grades, aging mines, and fewer major new discoveries. The World Gold Council warned in 2022 that production is "close to plateauing."

Industry warnings and trends

Concerns about peak gold have circulated for over a decade. In 2016, Mining.com observed there were “no more easy gold discoveries,” while MarketWatch warned of an impending production cliff.

Randall Oliphant of the World Gold Council echoed these warnings in 2017, predicting that production would plateau or decline. In 2018, Goldcorp Chairman Ian Telfer stated bluntly: “We’re right at peak gold.”

Since 2020, only five major discoveries totaling 17 million ounces have been reported. In the past decade, the number of new deposits has dwindled: 132 discoveries in the 1990s, 93 in the 2000s, just 25 in the 2010s, and none in the past three years. Of the 278 discoveries since 1990, roughly half remain undeveloped.

South Africa, once the top gold producer, offers a cautionary tale: in 2020 it fell out of the global top 10. A 2017 South African government study projected the country could exhaust accessible gold reserves within four decades.

Technological hope—but long timelines

There is reason for cautious optimism. New technologies may allow miners to access deeper and harder-to-reach ore. Rising gold prices also incentivize exploration.

Paul Manalo of S&P Global projects gold supply could peak in 2026, calling the outlook a “mixed bag.” Exploration budgets have risen since 2017, but translating new finds into production takes years.

Demand trends and price projections

Meanwhile, demand remains strong, with global central banks continuing to add gold to reserves—though net buying slowed to 12 tons in April due to a major sale by Uzbekistan.

Investment demand is critical for future price growth. Bank of America projects that gold could reach $4,000 per ounce and silver $40 per ounce by late 2025 or early 2026. To achieve this, gold investment demand would need to rise 18% year-over-year—a level surpassed in both 2016 and 2020.

Currently, gold prices have hovered between $3,000 and $3,300 after hitting $3,500 in April. BofA’s Francisco Blanch sees this as a consolidation phase, expecting prices to resume their upward trajectory in the second half of 2025.

Silver’s parallel path

Silver, too, is poised for gains. Though Blanch described it as “half precious, half industrial,” Maharrey argued that industrial demand—especially for green energy applications like solar—is driving the market.

Industrial silver demand hit a record last year and is projected to remain robust despite tariff uncertainties. Over time, silver historically tracks gold, albeit with more volatility. When Western investors return to the market in earnest, silver may see significant upside.

The bigger picture: Currency devaluation

Ultimately, Maharrey reminded listeners that rising gold and silver prices reflect the declining value of fiat currency. With U.S. national debt surpassing $37 trillion and little political will to curb spending, he contends that Treasuries are becoming riskier, while gold and silver remain true safe havens.

Bank of America concurs, stating: “Gold could end up being a less risky investment than Treasuries.”

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