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Gold is of very little intrinsic value. There are no major industrial uses. Gold is almost entirely used for personal adornment and investments. A reasonable approximation is that all the gold ever produced is 5,450,000,000 troy oz of which about 4,650,000,000 troy oz are still available for use. That gives around 68/100 of a troy oz of gold for every person currently living.
If gold mining continues at approximately the current rate and population growth estimates are correct the gold ratio will increase to about 80/100 of a troy oz for each person by about 2050. Thereafter the ratio would shoot up quickly with the decline in the world's population starting in no later than 2080. Eventually, even without new disruptive technology increasing the supply, gold will reach a critical tipping point where investment demand will no longer be sufficient to support the price of gold.
What is that number? Silver may provide an answer in its decline in value relative to gold at the end of the 19th Century. Then the total annual silver production shot up to a high of about 120 million troy oz a year and a total supply of about 7.5 billion troy oz. World population was much lower then as was world wealth. World population reached 2 billion in about 1927 when the world silver supply was about 10 billion troy oz. Silver had already come under serious pressure by that point so the change came at around 2-5 troy oz per per person.
Gold, in contrast, is only mined at about 72 million troy oz each year with a much greater world population to absorb it. So the answer on when gold will collapse is, in my opinion, not soon. Even assuming increases in gold production each year what I guess to be the critical ratio of around 3.5 troy oz per person will not be reached any time soon. Though we would be well on our way to about 1 ounce per person by 2050 if the low UN population estimates are correct.
The big difference with gold is that it is not consumed by activities like photography. Something like 85% of all the gold ever mined is still around, not lost, not made unrecoverable. So even with a lower mining rate we could start to reach the point of collapse by the end of the 21st century even without assuming disruptive technologies unexpectedly increasing annual gold production.
But for now you are all safe being gold bugs. Unless you are buying this year. Gold may still go up to $3,000/ troy oz, but I would not bet on it.
If gold mining continues at approximately the current rate and population growth estimates are correct the gold ratio will increase to about 80/100 of a troy oz for each person by about 2050. Thereafter the ratio would shoot up quickly with the decline in the world's population starting in no later than 2080. Eventually, even without new disruptive technology increasing the supply, gold will reach a critical tipping point where investment demand will no longer be sufficient to support the price of gold.
What is that number? Silver may provide an answer in its decline in value relative to gold at the end of the 19th Century. Then the total annual silver production shot up to a high of about 120 million troy oz a year and a total supply of about 7.5 billion troy oz. World population was much lower then as was world wealth. World population reached 2 billion in about 1927 when the world silver supply was about 10 billion troy oz. Silver had already come under serious pressure by that point so the change came at around 2-5 troy oz per per person.
Gold, in contrast, is only mined at about 72 million troy oz each year with a much greater world population to absorb it. So the answer on when gold will collapse is, in my opinion, not soon. Even assuming increases in gold production each year what I guess to be the critical ratio of around 3.5 troy oz per person will not be reached any time soon. Though we would be well on our way to about 1 ounce per person by 2050 if the low UN population estimates are correct.
The big difference with gold is that it is not consumed by activities like photography. Something like 85% of all the gold ever mined is still around, not lost, not made unrecoverable. So even with a lower mining rate we could start to reach the point of collapse by the end of the 21st century even without assuming disruptive technologies unexpectedly increasing annual gold production.
But for now you are all safe being gold bugs. Unless you are buying this year. Gold may still go up to $3,000/ troy oz, but I would not bet on it.