The Miners and Future Gold Production

We have somebody like Barrick selling off all sorts of mines. We have lots of producers that have decided to high grade and try to become more efficient in their existing mines, which of course means you’re leaving behind some of the gold that you would otherwise produce in order to try to hold it together with this low price environment. And all of those factors, of course, will lead to lesser production in the future, because once you bypass some ore it’s very difficult to get back at it, because in the case of an underground mine you filled it in and you don’t have access to it any more.

So I think that we will see production going down here. We know that exploration expenditures have fallen dramatically. We know that developments have fallen dramatically. We’ve seen lots of big developments postponed.

So the outlook on the supply side is, you know, we have not increased supply in the last 14 years. It’s been about the same every year, 2700 tons of gold for 14 years. And I suspect that as we go into even the latter part of this year, into ’15, ’16, ’17, there’s no way that production can go up if prices stay at these levels.

I mean, some of them may go out of business as well. We’ve had lots of mines shut down, but I wouldn’t particularly say that the large guys will go out of business. I think at $1300 gold, most people can hold on here. But holding on is one thing, increasing production is another one. And to the question, I think, the real impact will be on future production.

- Eric Sprott via Ask The Expert