Secular Bull.com

Junior Gold Producers 2

February 4th, 2012

It only took eleven years, but in 2011 global gold-mine production has finally returned to pre-bull levels.  In fact, with 2011’s volume expected to come in at around 88m ounces, we’ll see a new all-time production high.  The latest exploration-and-development cycle is finally starting to bear fruit!

This fruit has been hard-earned though, as the miners have had to reverse the course of a brutal production decline that bottomed out in 2008.  Incredibly global gold production had fallen nearly 13% in five years from 2003’s high, to a level not seen since the mid-1990s.  And needless to say that painted quite an alarming fundamental picture considering demand was on the rise.

Thankfully in the last three years the miners have diligently worked to grow production, adding about 15m ounces per year to supply at 2011’s rate.  And we’ve seen this production growth on a variety of different fronts.  The miners have brought back to life past-producing mines that now have positive economics at the current gold price, they’ve expanded existing mines to push through more material, and they’ve built brand-new mines to tap the latest generation of discoveries.

This growth is the product of billions of dollars of capital investment, along with a healthy dose of blood, sweat, and tears.  Gold mining is a tough business, especially in a world where gold is getting harder and harder to find.  And the miners in the trenches getting their hands dirty to bring us the shiny-yellow metal we so crave must be rewarded for their endeavors.

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