Peak gold 'not a far-fetched concept'

A longer-term view of the gold investment market may highlight the prospect of severe supply shortages, it has been claimed.

While short-term demand levels are still in question, a look ahead to the situation in ten years' time may make the current high gold prices "look like a bargain", according to Peter Hodson of Sprott Asset Management.

Writing for the Financial Post, Mr Hodson said that the overall commodity market looks set to experience significant shortages in the future, particularly as a result of rising mining costs and political issues, among other factors.

"It seems like there is a potential perfect storm brewing on the commodity front over the next five to ten years," he stated.

Of course, gold mining production has already shown signs of slackening in recent times. According to precious metals consultancy GFMS, global output fell by one per cent last year.

Meanwhile, issues out of the control of mining firms - such as power issues, attacks on mines and unforeseen closures - have already served to dent some companies' gold production in recent weeks, placing upward pressure on gold prices as a result.

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