Investing in gold is a wise decision and I have been advising you to invest in gold since last year.
And, if you have made your decision not to invest in Gold, then you are missing huge potentiality.
Humans take a few years to mine or extract gold, but it takes millions-of-years for minerals to formulate gold in the deep of the earth’s crust.
It is the continuous process for mining companies, they need to discover for new deposits. Therefore, the number of mining businesses hasn’t been increasing.
Large mining organizations cutting their investigation budgets for a considerable length of time and the investigation budget hit an 11-year low, by the end of 2016.
As a result, the gold price remains almost the same as the previous years, and this is the main reason behind disinterest of investors towards the gold investing sector.
The chart of the Gold Miners ETF (GDX) reflects the same thing what I was trying to explain, the price has been almost the same for five years.
Also, the gold price was going down by 30% compared to the price in 2011.
To survive in the bad times, gold mining companies had reduced their investigation budgets.
This scenario indicated that the demand for gold will pick up again and there will be insufficient gold supply.
Surprised? Ok. Don’t believe my words!
Major reasons to invest in gold
Pierre Lassonde, the billionaire founder of gold royalty giant Franco-Nevada and former head of Newmont Mining –
“If you look back to the 70s, 80s, and 90s, in every one of those decades, the industry found at least one 50+ million-ounce gold deposit, at least ten 30+ million ounce deposits, and countless 5 to 10 million ounce deposits.
But if you look at the last 15 years, we found no 50-million-ounce deposit, no 30 million ounce deposit, and only very few 15 million ounce deposits.
So where are those great big deposits we found in the past? How are they going to be replaced? We don’t know.”
Ian Telfer, chairman of Goldcorp, who told the Financial Post:
“If I could give one sentence about the gold mining business … it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years. Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down… We’re right at peak gold here.”
Let’s think! Gold production is peaking, and the large companies are not spending to explore new deposits, these indicate there will be a drastic change in the gold industry when the demand picks.
As a result, all miners will begin to overtake one another to accelerate their production in order to meet the rising demand for gold.
These are already happening – Telfer’s Goldcorp ($8.5 billion) company was acquired by Newmont Mining for $10 billion.
That isn’t a coincidence! Barrick Gold bought Rand Gold in $6 billion.
This is closely what we are expecting where large miners acquiring one another to fix the gold production issue. And If I am not wrong, it should be beneficial for long-term by means of gold prices.
Now, some of the biggest gold mining companies spending $16 Billion (combined) to increase their gold assets. This indicates that there is a big shortage of GOLD – It’s just started!!