Gold supply heading for peak unless miners ramp up exploration spending, resource consultancy Wood Mackenzie says
- Gold miners slashed their exploration budgets when the gold price fell from the highs of 2011/12 and have kept them low ever since, say analysts
- Global gold output from mines edged up 1.1 per cent in the first half of 2019, a marked slowdown
Gold, one of the more popular risk-hedging tools in the past two months of global turbulence, may see supply peak if miners do not increase their spending on exploration, according to Wood Mackenzie.
The London-based natural resources consultancy said gold producers have kept their spending on discovering new resources under tight control.
The word of caution on supply would support analysts’ prediction that the gold price will head higher in the next two years, having gained 23 per cent in the past 12 months as investors parked more money in the traditional safe-haven asset.
“While the resurgent gold price has garnered a renewed sense of optimism in the industry, it has also shone a light on a structural issue that has been brewing for some time,” said the consultancy’s analysts in a note last week.
“Exploration budgets were slashed following the fall in gold price from the highs in 2011 and 2012 and they have since failed to recover.