The Gold Report: Brent, you've quoted Goldcorp Inc.'s (G:TSX; GG:NYSE) CEO, Charles Jeannes, saying that we've reached peak economic gold production. What led us to this point?
Brent Cook: That's a big question that really goes back to what was happening in the global exploration sector 20+ years ago. I don't want to get into the peak gold production idea but instead focus on the discovery curve and what's behind the problem we are seeing in the gold sector.
Why aren't we finding as many gold deposits as we used to, or at least as many economic deposits? In 1995 or so, the discovery boom in the gold sector peaked and that success is largely tied to the opening of large areas of earth that were previously off limits to serious exploration. Since then, exploration success and new discoveries have trended down. However, in terms of gold production, it's taken about 20 years for all those discoveries to work their way through the system to come into full production.
So what Charles Jeannes sees is that in 2015 or so, gold production is going to be tapering off as opposed to expanding. That's especially true given the current gold price and cost structure. A lot of these companies aren't making much money, or any money at all. They'll be shutting down loss-making projects over the coming years.
TGR: Are we running out of gold in the world, or did we just not make an investment in a timely manner, say, 20 years ago? Continue reading "Investing During the Era of Peak Gold Discoveries"