Ganesh Komma argues gold supply is breaking: zero major discoveries in 2023 and 2024 versus 20-28 per year historically. Central banks are buying over 1,000 tons yearly, the most on record, after Russia's dollar assets were frozen in 2022. With only 54,000 tons of economically viable reserves left, tighter supply and geopolitical risk will keep pushing demand.
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Something historic is happening in gold and almost nobody is talking about this real reason. For the first time in modern history, the world has recorded zero major global discoveries for consecutively two years. Which is in 2023 and in 2024. And at the same time, central banks are buying gold at record levels. This is not coincidence that this is purely a structural play. Now let's discuss the first part which is supply shop. In the 1990s, we used to discover 20 to 28 major gold mines every year. Today it's zero. Not one, not two, it's zero. That means future mine supply growth is slowly going down. Gold is becoming harder to find, harder to mine and more expensive to replace. This is a long term structural supply constraint. Now let's look at the second part which is central bank buying. Now look at this. Central banks are buying over 1,000 tons per year, the highest in the modern history. Why? What is the main reason for it? After Russian dollar assets were frozen in in 2022, majority of the countries realized gold cannot be sanctioned. Gold cannot be printed and gold is a neutral money. China, India, Russia, Middle east nations, all are accumulating. This is not retail demand. This is purely a geopolitical position. Now let's look at the third part which is the bigger picture. Above grown ground gold is finite, it is limited. The total stock about 2,16,000 tonnes and the below ground reserves just around 54,000 tons. Economically viable. And the new discoveries are almost collapsing. So what happens when the supply tightens? Central banks normally accumulate more which is what is happening now. The geopolitical risk rises and now you get the structural support for gold now closing. Like the investor positioning, gold is not a wealth creator like your equities. Gold is an insurance, gold is capital protection and gold is a monetary hedge to your portfolio. And smart portfolios allocate 5 to 15 percentage strategically and not emotionally. This is not hype, this is a pure macro shift. Study it position wisely, think long term. And do let me know in the comments. What are your key takeaways and what is your thought process on gold as a part of your asset diversification?
