Big news in the gold industry! An absolutely massive, historic discovery of gold ore has been found in the African country of Uganda. What does this mean for the gold price in the short term
and long term? How should you prepare for this and possibly take
advantage of a bad situation? What can this teach us?
Conrad Morris & Associates has been in the gold, silver, coins, jewelry and gem business for more than 40 years. They have the experience and knowledge to help you understand what this massive gold discovery means for your investment.
Where Does Gold Come From?
Gold From The Stars
There are a few theories on the origin of gold, but generally it's agreed that gold forms in outer space when stars explode or collide. The resulting nuclear energy creates atoms of gold.
Gold On Earth
Gold was likely present when the Earth originally formed. When Earth was completely molten,
gold, as a heavier metal, likely sank closer to the core of our planet. Volcanic activity, earthquakes, molten lava, and water disrupt and transport gold from within the Earth to the surface. It is also
believed that asteroids deposited extensive amounts of gold, mainly when Earth was still a very
young planet.
Gold shows up on Earth in two main forms: gold ore (pictured above right) or flakes and nuggets that have been freed from ore. And ore is what was recently discovered in Uganda. A lot of it. Solomon Muyita, the spokesperson for the Ministry of Energy and Mineral Development of Uganda, said the results of a 2 years study show 31 million tonnes of gold ore in the northeast region of Uganda. While independent officials haven't authenticated the claim, Muyita said geophysical and geochemical surveys and analyses were used to identify the massive gold deposits.
What does the UgandaN Gold Discovery Mean for Gold Markets?
Is the Gold Discovery in Uganda True?
Uganda claims to have discovered 31 million tonnes (metric ton) of gold ore, but in the same press conference they claim they can extract 320,158 tonnes of refined gold. That math just doesn't add up. A high quality gold mine typically yields 8-12 grams per tonne of ore. The spokesperson likely meant 320 tonnes, which would still be a very high rate of gold extraction from 31million tonnes of ore. It is estimated that a total of 201,296 tonnes of gold exists above ground today. If their refined gold claim was true, it would more than double the existing amount of gold in circulation! Further evidence of a miscalculation.
While the math error doesn't invalidate the gold ore claim, it does beg for independent verification.
Immediately after the announcement many international gold mining operations were vying for investment in this discovery, so there is definitely some truth to this, but the full extent won't be known for a while. Is there enough gold to raise the world supply and send prices crashing?
What was the Immediate Market Reaction?
The gold market didn't immediately plunge, which would be expected if the gold supply more than doubled. However, the gold spot price is down more than 7% since early June. Was it Uganda's gold discovery that sent the price down?
While it might seem like the market negatively reacted to the discover, it's important to see the broader market context. The gold spot price has been declining since March, so when this discovery was announced, the market was already declining. While there was a steep drop in late June that could be attributed to this discovery, the price jumped back up in July.
Final Conclusions
The massive discovery of 31 million tonnes of gold ore in Uganda hasn't been independently authenticated, but the Ugandan government has already licensed Chinese firm Wagagai Gold Mining Company to begin mining the area.
While there is likely a huge amount of gold, it will take time to mine and refine, so it didn't seem to significantly impact the gold price. Approximately 2500 tonnes of gold is mined and added to the market each year. A dip in demand and a large increase in supply could end gold's steep price increase that has been moving up since 2018. Gold is usually considered a safe place to put your money, but it is still subject to supply and demand.
The opposite is also true. We know how gold is made and aside from a golden meteor shower that doesn't kill us all, there is a finite amount of gold on Earth. The World Gold Council estimates approximately 77% of Earth's available gold has already been mined. At the global production rate of 2500-3000 tonnes per year, recoverable gold supplies will be depleted in the next 2-3 decades. When that time period approaches, watch the price shoot to the moon!
In conclusion, the Ugandan gold discovery is exciting and it teaches several lessons about the gold market, prices, and the history of gold, but it shouldn't negatively impact your current gold investment. It is a great reminder to watch the spot price of gold, pay attention to trends, buy and sell when the time is right, and you can feel safe in longterm gold investment.
Gold Price
It's important to watch the spot price of gold when you are looking to buy or sell. CM+A can help keep you informed of the most recent movements in the price of gold. As always, we take a look at two charts to help provide some perspective on the price. The previous 30 day chart can show you the recent trends and the previous 365 day chart gives a larger context to the current trend.
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Gold Spot Price Last 30 Days | Gold Spot Price Last 365 Days |
Conrad Morris & Associates
CM+A has decades of experience buying and selling. CM+A is based in Indiana, but spends much of the year in Sarasota, Florida area. Conrad has built a longstanding, loyal customer base because we use the latest evaluation references and metrics to offer the highest market payouts in the industry, often up to 98.5% of market value. Contact us today to schedule a private home visit to buy and sell coins, jewelry, and other forms of precious gems and metals.
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