Current gold coin and bullion reserves are the end result of millenia of human refining. Yet, much of the gold in the world is still buried deep in the ground. It would require an immense amount of mining technology to retrieve it. Only been in the past 50 years has gold mining technology improved enough to speed up the mining process without compromising safety.
So technology is desperately needed if gold supply is to keep up with demand. Why?
As with all estimates of total gold deposits remaining in the earth, accounts vary on just how much gold is located at the centre of earth.
However, we found several sources saying almost the exact same thing. If you start with a Google search, you will find there is enough gold in the molten centre to cover the entire earth in a 1.5-foot coating.
This is supported by Australian geologist Bernard Wood who also gives the 1.5-foot amount. What does that work out to in tonnes? Wood calculated there to be 1.6 quadrillion tons of gold in the earth’s core.
What's the catch: we will never get our hands on that stuff because it is far too immersed in molten lava. And we move on to the next best source of easy gold: the ocean. So are gold deposits in the ocean the best source for new excavation? Does it depend on how much gold is in the ocean?
According to the National Ocean Service, an arm of the U.S. Department of Commerce, gold on the seafloor is more bountiful than you could even imagine. First of all, there is gold in the water of the ocean measuring at approximately 20 million tonnes. The issue is extracting the gold from the seawater itself, which is far costlier than mining it.
When it comes to gold under the ocean floor, scientists estimate there is enough gold in the seafloor to give every person on the planet nine pounds of the precious metal. That is an astronomical estimation that should be taken with a grain of salt. Still, it points to the huge potential for mining projects. If only a portion of this gold makes it into the market it will cause a series of progressive price changes.
The Chinese are the world’s largest producers of gold year over year, and they have set their eyes on the ocean to hit it really big. A recent piece in the Financial Times highlights the extent of China’s marine pursuit.
“China has more mining and exploration areas in the international water than any other country – in line with its higher mineral demand”. These are the words of Stef Kapusniak, an engineer with UK-based SMD. The company manufactures remote deep-sea vehicles, and was recently acquired by a Chinese state manufacturing concern.
When it comes to capability of mining itself, the Chinese are also improving very quickly. Take the following comment from Michael Johnston, head of Nautilus Minerals, as evidence of their progress.
“China is now capable of doing 80 per cent of the entire thing (mining), from building the machines to the boats.”
Given the focus China has put into the ocean, gold markets can be expected to fluctuate quite a bit. The increase in supply may actual induce the price of gold to drop a little in the short term as the incessant demand is finally met.
Demand is coming from a lot of unexpected areas. For example, the spike in gold investment from the Kremlin reinforces strong interest in precious metal coming from the East.
Over the long term, it is expected that the demand for gold will only increase because of industrial usage. USfunds.com gives a great overview of the various uses for gold. Scrolling through their list you will notice that gold is used in all electronics because it is a great conductor of electricity. The market for phones, computers, TVs, and other electronic devices is only expected to rise in the next decades. Consider that analysts at Nasdaq recently project the Apple stock to grow at an annual rate of 10.9% over the next decade.
So, can we expect the overall price of gold to level out with gold from the ocean coming in? Or should we weigh other factors leaning into gold prices more strongly? All we know is that the mining technology will be exciting to watch for the next few years.
At Global Bullion, we buy all sorts of precious metal bullion through our sister store Muzeum, including gold and silver.