Peak Gold? The Ore Grade Decline Nobody Wants to Talk About

Mining engineers have a saying: grade is king. The metal you do not need to dig out, crush, and chemically separate is the most profitable metal in your deposit. Unfortunately for the gold industry, the king is in slow decline.

The data

Global average mined head grade has fallen from roughly 3.0 g/t in the early 1990s to about 1.4 g/t today. That means almost twice as much rock has to be moved per ounce produced. Energy intensity per ounce has correspondingly nearly doubled.

• 1990 average grade: ~3.0 g/t
• 2024 average grade: ~1.4 g/t
• Number of multi-million-ounce discoveries since 2010: under 30
• Average discovery cost: above $50/oz, up from $13/oz in 2005
• Average mine development time from discovery: 16 years

Why the decline?

The easy stuff was found first. Surface oxide caps, visible vein systems, and shallow placers were exploited in the 19th and early 20th centuries. What remains in the ground is increasingly deep, refractory, or buried under jurisdictions hostile to capital. Exploration budgets have not scaled fast enough to compensate.

"You cannot drill your way to a discovery if you do not have permission to drill." industry geologist, Vancouver

Is this peak gold?

The phrase "peak gold" was popularised around 2018 when several majors warned global mined supply might plateau in the 2020s. Strictly speaking, supply has not yet peaked: 2023 set a record near 3,650 tonnes. But the marginal ounce is more expensive, and the pipeline of new tier-one discoveries is anaemic. Peak cheap gold is probably the more honest framing.

Implications for price

Inelastic supply combined with central bank buying creates a structurally tight market. Even modest demand growth from jewellery or ETFs can move price meaningfully. That is part of the bull case for gold equities and royalty companies.

Takeaway: the geology is not getting friendlier. That alone is a reason to take long-term gold exposure seriously.