Gold was first discovered in what are known as placer deposits. These are host rock that have been naturally worn down by weather and have released gold particles that travel down a slope to a hillside, canyon mouth, or stream-bed.

Today, most gold comes from mining hard rock deposits either through open pit or underground mining. Deposits form when gold is dissolved in hot pressurized fluids deep in the crust, and then transported upwards on fissures and cracks where it is deposited closer to surface.

90% of the gold produced today is recovered through a cyanide leaching process.

The world’s gold supply comes from three sources – official sales, recycled gold, and mine production. A few years back, central banks started to increase the amount of gold they bought and China, India and Russia have been buying as much gold as they can get their hands on. More retail investors (people like you and me) have also been buying more gold recently, especially now that the price is on the rise again.

Existing mines are running dry and the increasing cost of finding gold has driven some mines out of business. Data also shows that the grade of underground and open pit gold mines are decreasing over time (click the image for a larger view).

Gold: Mining And Supply