The global gold market is facing a paradox. Despite prices of metal surging to unprecedented levels and driving record cash flows for producers, the exploration activity is stagnating.
The latest research from S&P Global Commodity Insights noted that in 2024, the industry added just three major deposits to its global database. This addition raised the reserves from 2.9 billion ounces over 350 deposits to 3 billion ounces over 353 deposits. Still, these new entries are not fresh finds in the traditional sense; most were discovered decades ago and have only recently met the two-million-ounce threshold to qualify for the list.
In reality, no significant new deposits were found in either 2023 or 2024, and since 2020, only six major discoveries have been recorded, totaling 27 million ounces.
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The recent gold price performance has been extraordinary. Starting in late 2022, prices began to climb steadily, driven by geopolitical tensions and renewed central bank buying. By late 2023, gold broke through the $2,000 per ounce level for the first time in years, and by March 2025, it surpassed $3,000 per ounce amid ongoing conflicts in Europe, heightened Middle Eastern unrest, and the economic reverberations of U.S. tariffs. April 2025 saw gold briefly touch $3,500 per ounce during a full-blown trade war between the United States and China, as investors rushed into safe-haven assets.
Despite this sustained rally, exploration budgets have trended sharply downward, falling 15% in 2023 and another 7% in 2024, ending a growth streak that had been in place since 2017.
As institutions rushed to buy gold to hedge against inflation, gold prices rose. Yet, rising interest rates created tighter financial conditions for junior exploration companies. Thus, negating the anticipated increase in spending.
This situation is partly due to a pronounced shift in industry strategy. The share of grassroots or early-stage exploration within total budgets has dropped to just 19% in 2024, down from 50% in the mid-1990s. Companies have become increasingly risk-averse, preferring to expand known deposits rather than gamble on untested regions. S&P’s analysis shows that more than half of the initial resource announcements made between 2020 and 2024 came from existing projects.
Another issue is the decline in the average size of new deposits. In the previous decade, major discoveries averaged 7.7 million ounces; since 2020, that figure has fallen to just 4.4 million ounces. Furthermore, none of the discoveries made in the past decade have ranked among the world’s 30 largest.
The complexities of modern gold exploration add to the slowdown. Political instability in emerging markets can derail promising projects, while environmental and permitting hurdles remain formidable. The controversial Pebble mine project in Alaska, which contains one of the world’s largest undeveloped gold resources, is one of the best examples showing that even a groundbreaking discovery can end up in a mining limbo.
Price Watch: SPDR Gold Trust ETF (NYSE:GLD) is up 29.20% year-to-date.
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