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Will We Run Out Of Gold And Silver?

Topics [ silver gold mining ]

RESEARCH & ANALYSIS

The Scientific American magazine recently featured and article titled How Much Is Left? The Limits of Earth's Resources which predicts that we will run out of gold and silver around 2030 based on current production levels and known reserves (although recycling could extend that date).

Nick Laird at Sharelynx.com was immediately on to this claim, sending me an email saying that “the trouble with this methodology is that there are always new finds being added in so the Reserves are an every changing number. Reserves are not a finite amount that will be exhausted.”

Porter Stansberry made a similar point in a recent post on Peak Oil, saying that such approaches do not “account for further discoveries of additional reserves or changes to technology that could extend the life of the wells.”

Nick’s point is best demonstrated in the two graphs below that he has kindly allowed me to publish from subscriber service. The figures come from the United States Geological Survey (USGS) and show

• World annual production

• USGS’ estimate of reserves in the ground

• Year left until those reserves are exhausted at current production rates

The charts show that every year the reserves are not actually declining in any significant way, with the result being that the Years Left figure is somewhat stable.

For example, in 1989 the USGS estimated gold reserves at 42,000 tonnes, which at that year’s production rate of 2,023t would last 21 years. However, by 2011, the USGS’ reserves estimate had increased to 51,000t which is predicted to last 19 years.

For silver, production figures show a dramatic increase from 14,600t in 1995 to 23,800t in 2011. However USGS’ reserves estimates increased 90% from 280,000t in 1995 to 530,000t in 2011. The result is Years Left increasing from 19 to 22 years.

As Nick says, “miners are finding more than they are consuming.” Another reason is that as the gold and silver price increases, what can be economically mined also increases geologists estimates of reserves.

So it doesn’t look like we will run out of gold and silver any time soon.

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