1st Time Ever No Major Gold Discoveries in 2 Straight Years, Ounces Can’t Be Printed, Central Banks Hoovering Up Supply, & 15-Year Lag Means Structural Whiplash Baked In!

H/T TAVI COSTA FOR CHART

The chart tells a story that years of market noise have tried to obscure. For the first time in recorded history, data from S&P Global confirms that for two consecutive years; 2023 and 2024, there have been zero new major gold discoveries of at least 2 million ounces. This has never happened before.

While investors have been distracted by short-term price volatility, the pipeline for future gold supply has completely collapsed. This isn’t a cyclical downturn; it is a structural crisis decades in the making.

The old adage that “high prices are the cure for high prices” is about to be put to the ultimate test, and it will take a whole lot longer than most anticipate.

The whiplash from years of chronic underinvestment in exploration is just beginning, and it is happening at the exact moment that global demand, led by central banks, is escalating.

This is the real barometer of the mining cycle. We are not at the top; we are at the beginning of a supply crisis that will redefine the gold market for the next generation.

This is not just about gold. Major discoveries across virtually all metals have collapsed into the single digits. The global mining industry, starved of capital for over a decade, has been forced to high-grade existing deposits and defer exploration.

The easy-to-find, near-surface deposits are gone. Companies are now drilling deeper, in more remote locations, at exponentially higher costs, and they are coming up with less to show for it.

The geological reality is setting in: the world is running out of economically viable deposits to discover. And unlike software, you cannot scale mineral production with an update. The physical world has limits, and we are now beginning to hit them.

The timing could not be worse. At the precise moment the discovery pipeline has gone to zero, the world is waking up to the need for real assets.

• Central banks, watching the dollar-based system unravel in real time, are accumulating physical gold at a pace never before seen.

• Sovereign wealth funds are beginning to rotate out of paper and into hard assets.
• Retail investors, burned by the implosion of speculative tech and crypto, are increasingly seeking safety.

The demand curve is vertical, and the supply curve is about to fall off a cliff. The market has not yet priced in the severity of what is coming. This is not a trade; this is a structural realignment that will play out over the next decade and likely longer.

Here is what you need to know;

• You need to know for the first time in history, there have been zero major gold discoveries (2M+ oz) in two consecutive years (2023-2024).
• You need to know the total number of major discoveries found in the last eight years is equal to what was discovered in 2009 alone.
• You need to know this is a structural crisis, not a cyclical one, stemming from a decade plus of underinvestment in exploration.
• You need to know major discoveries are the primary predictor of future supply, and the pipeline is now effectively running on fumes.
• You need to know the typical 10-15 year timeline from discovery to production means this supply crisis is already baked in for the next decade or longer.
• You need to know unlike tech, you cannot scale mining with a software update; the physical reality of resource depletion will set in.
• And you need to know this supply cliff is converging with record demand from central banks and a backdrop of unprecedented global debt and money printing, creating a volatile cocktail for much higher prices.

Gold discoveries of larger than 2M ounces have collapsed. For the 1st time ever no major gold discoveries in 2 straight years occurred. Ounces can’t be printed. Central banks continue to hoover up supply at a record pace & the 15-year lag means structural whiplash is baked in!

Let’s Dig Into The Following:

1. The empty pipeline is decades in the making. The data is unequivocal. The rate of new, large-scale gold discoveries has fallen off a cliff. The era of finding multi-million-ounce deposits near the surface is over. According to S&P Global, the number of new discoveries containing at least 2 million ounces of gold has been in a state of terminal decline for over a decade. There hasn’t been a year with double-digit discoveries since 2009. Why when we put the current crisis in perspective, the total number of major discoveries made over the last eight years combined is equal to what the industry found in the single year of 2009 and that’s a huge problem moving forward!
2. Since all of the easy to get to deposits have been mined over the last 15 years, the industry is now having to go deeper and into more remote and geopolitically risky jurisdictions to find new deposits, making the process exponentially harder and more expensive. Why the market has been conditioned to believe that supply is a function of price, but it is forgetting the most critical input: geology, and the reality is that the deposits simply aren’t there to be found in the way they once were!
3. Now the cure is broken. The classic economic mantra is that “the cure for high prices is high prices.” In a normal market, a rising commodity price incentivizes new production, which eventually brings the market back into balance. This time is different. The supply response to the current bull market in gold will be shockingly muted for quite some time, not for a lack of trying, but for a lack of viable projects. Why the chronic underinvestment in exploration has created a structural deficit that cannot be fixed by a higher price alone any time soon!
4. The 15-year lag reveals that you just can’t print ounces. The market’s short-term focus is its greatest weakness. It fails to appreciate the immense lead times inherent in the mining industry. Even if a company made a world-class, 10-million-ounce discovery tomorrow, it would take, on average, 10 to 15 years for that mine to enter production. How the single longest part of that timeline, often taking up to a decade, is the process of resource definition; drilling tens of thousands of holes to prove the size and scale of the deposit to a level sufficient to justify the multi-billion-dollar investment required to build a mine and for the first time in history, the very first step in that process; discovery, has ground relatively to a complete halt!
5. And all of this is a volatile cocktail that is creating an oncoming cliff. On one side, you have a future supply curve that is not just flattening, but is set to fall off a cliff unless something major changes, soon. On the other side, you have a demand picture that is exploding. Central banks are buying gold at a record pace, desperately seeking an alternative to a collapsing fiat currency system. Why the collision is inevitable, as a structural supply crisis is converging with a monetary and geopolitical demand crisis and thus the recent volatility is merely a tremor before the massive 10.0 earthquake hits us!