Peak Gold? Why new supply can’t keep pace
Peter McGahan
Monday 8th December, 2025.
IN the seventh in the series about investing into gold, let’s cover the point of gold supply.
Peak gold? That’s the point at which global gold production reaches its highest annual level, after which output either plateaus or declines due to dwindling discoveries and harder-to-mine reserves.
For more than a decade, talk of "peak gold" has oozed itself out through analyst briefings and mining reports. It has never been an apocalypse story rather, more a long, dry fading - mines running leaner, new discoveries dwindling, the easy gold is gone. Remember that pump and dump schemes/stories are still prevalent and for every seller of dodgy car, there must be a buyer of a dodgy car.
Healthy cynicism is, well, healthy.
Now, something has begun to glimmer on the horizon. But as so often in gold’s story, the real shifts aren’t where the noise is loudest.
Start with the facts. Global mine production has hovered just under 3,700 tonnes a year, give or take, for most of the last decade. That number hides a tougher truth: the average ore grade - how much actual gold sits in a tonne of rock - has halved since the 1990s – so its 50 per cent less efficient. According to both the World Gold Council and S&P Global, we are now in what is called consensus territory: peak gold may already have passed.
South Africa, once the bedrock of global output, has slipped to near irrelevance. China, still the world’s top producer, is hitting geological walls and rising production costs. New deposits take years to explore and longer still to permit. Even if a major find lands tomorrow, there is little chance of fresh supply hitting the market before the next decade.
This isn’t a cliff edge. It is a slow structural squeeze.
Which is why Saudi Arabia’s announcement last month has caught the market’s attention. In the Makkah region, the state-backed Ma’aden mining company confirmed a significant new gold belt, stretching more than 125 kilometres, with high-grade drilling results.
One drill hole showed over 10 grams per tonne across 60 metres which is rich by any standard. The Rjum project alone is expected to yield 3.6 million ounces over the next 12 years. That is enough to change the Saudi mining story, but not yet enough to reset global dynamics.
Here’s why - gold production takes time. A discovery is not supply. It is a starting line. The industry average to move from discovery to any meaningful production is seven to 15 years. Environmental clearances, logistics, political stability, infrastructure, and capital all must line up. As with many resource stories, the promise is long term.
In the meantime, the numbers remain tight. Central banks - Poland, India, China, and others - are buying more gold than at any point since the Cold War. Consumer demand across India and China remains sticky as they physically and culturally want it, and they are still price tolerant ie: they think it represents good value. When gold prices rise, some old rings and bangles get sold. But when prices fall, people hold on to their jewellery.
So even with news from Riyadh, there is no surge of metal headed for the refinery.
Think of the gold market as a pub on a packed Friday. The keg is nearly empty. Then someone announces a fresh barrel has been found, but it is still in the delivery van, down the road, behind a locked gate. It will arrive. But not tonight - new pint price.
For investors, this means two things. First, scarcity remains a live issue. The Saudi find is material, and important, but it does not alter near-term supply. Second, costs are rising. Getting gold out of the ground is not getting easier or cheaper. ESG regulation, community negotiations, and energy inputs are all pressing upwards.
So, is peak gold behind us? Technically, it might be. Practically, the pause feels closer to a plateau than a bounce.
Most importantly, the key players - the Reserve Bank of India, the People’s Bank of China, and the central banks of Eastern Europe are not basing their strategies on an imminent surge in supply. They are acting as though gold remains hard to find, slow to deliver, and increasingly strategic and divesting from being leveraged by the dollar.
That is your takeaway. Until the new mines open, and the gold flows in, the global supply crunch is not over. The desert may glitter, but not for a while going away.
I will be writing a formal guide on gold. If you would like a complimentary copy, you are welcome to request one. The guide provides general educational information only and does not constitute personalised financial advice. Requesting the guide does not create any obligation to take advice or make an investment.
Please call 01872 222422 or email info@wwfp.net to request your copy. Peter McGahan is the Chief Executive Officer of Independent Financial Adviser firm, Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
