Gold production in transition: trends and cycles

Usually, production volume and price of gold tend to develop in opposite directions. This should not surprise anyone: falling gold prices render the production increasingly uneconomical. The production of gold has always been subject to cycles. Within these cycles, however, a clear trend to continuously growing quantities of gold can be observed since the early 1980s. Following the onset of the credit crunch, another notable trend started: since 2008, production volume and price of gold have moved in the same direction, i.e. the gold price has risen despite increasing quantities.

Not only the annual production volume, but also the origin of gold has changed considerably over the past 50 years: whereas in 1970 South Africa dominated the gold production with more than 1,000 tons of gold mined at a total worldwide volume of 1,485 tonnes, the country ranked only as the fifth-biggest gold producer in 2013 with an output of 145 tonnes – behind China, Australia, the USA and Russia. China, the biggest gold producer in 2013 with an output of 420 tonnes, had mined no more than 1.5 tonnes of the precious metal in 1970. Russia, mining some 200 tonnes of gold in the seventies and even surpassing the 300 tonnes mark in the late eighties, slowed down production sharply later on and has matched former mining quantities only following the onset of the financial crisis. In 2013, Russia produced 220 tonnes. US-based gold production had its zenith in the late 1990s, when up to 366 tonnes were mined annually. Subsequently, the annual production leveled off to 220 to 230 tonnes. Even the financial crisis would not have changed this. In 2013, more than 3,000 tonnes of gold were produced – a world record in gold mining.

Nevertheless, gold investors do not have to worry about a potential oversupply or, as a consequence, a price decline: since 2012, no new gold deposits have been discovered worldwide - gold remains scarce and precious.

Arnulf Hinkel
Freelance financial journalist