Experts: “Peak Gold” Has Arrived

We have it on good authority that the world is fast approaching a “gold production cliff.” Supplies are drying up. So… Has the world reached peak gold? And what does it spell for gold prices? Consider… 

The crackerjack analysts at Sprott Asset Management say global gold discoveries peaked in the mid-1990's. And gold production hit a new all-time record in 2015 — for the seventh consecutive year. But Sprott says 2015 could go down as the year global gold production maxed. 

According to Pierre Lassonde, chairman of the gold royalty and streaming company Franco Nevada, the number of “super-giant” discoveries (more than 20 million ounces) has plunged in recent years. 

In the 1980's, he says, 14 super-giant deposits were located. Eleven were found in the 1990's. But only two have been discovered in the past eight years. And none in the past five.

Add it all together and you’re looking at a melt-up in gold prices. Says Kelvin Dushnisky, president of Barrick Gold, “Falling grades and production levels, a lack of new discoveries and extended project development timelines are bullish for the medium- and long-term gold price outlook.”

DYI Comments:  DYI's take on this is similar to oil and gas.  The days are over for easy to find and extract oil and gas(and now) gold.  This places an upward bias at least from a supply perspective.  Today gold as measured by the Dow/Gold Ratio is neither bullish nor bearish as it is trading very near its mean.  This is why DYI's model portfolio only holds its position at 13%.
   
1-29-16 Dow/Gold Ratio 13.58 to 1.

Secular Market Top - Since January 2000
7-1-16
Updated Monthly

From High to Low

+355.2% Gold

+152.9% Utilities

+151.4% Transports

+  88.8% Oil
+  64.4% 30 year Treasury bond

+  61.7% Swiss Franc's

+  56.0%  Dow
+  42.9% S&P 500

+  19.0% Nasdaq

Gold is and has been in a secular bull market since stocks peaked(secular basis) in the year 2000 outperforming all other major asset categories.  Of course that was then and this is now. Gold has more to go on the upside before it peaks on a secular high.  This will be the classic speculative blow off as gold and precious metals mining stocks run their prices to the heavens. When that happens stocks will be on the give-away-table with the Shiller PE10 under ten.

Hold onto your hat and your cash better values are ahead!

The Great Wait Continues

DYI