The continuing rise in gold prices, ongoing expansion and the boost from 'safe haven' investment during Coronavirus will see Australia overtake China to become the world's largest gold producer next year.

This is according to a report from Australia-based resource analyst Resources Monitor, which determined "with reasonable confidence" that Australia has the competitive edge to become the world leader in gold production from 2021.

Cost-effective Margins

Most gold mining companies in Australia have demonstrated consistently strong performance across 2020, especially compared to other resources such as iron ore, coal and crude oil that have seen significant declines.

This is expected to continue as long as gold prices exceed costs, with companies taking advantage of low oil prices and other economic advantages that are creating greater operating margins, enabling miners to invest in improvements and expansion.

Significant Expansions

Mining companies are making the most of the situation by expanding their current operations or starting new projects. The most productive mine expansions currently underway include:

• Cadia Valley, New South Wales (Newcrest Mining) – 840,000oz of doré expected in 2020
• Carosue Dam, Western Australia (Saracen Minerals) – 500,000oz
• King of the Hills, Western Australia (Red5) – 100,000oz

New mines expected to begin operations this year include Bardoc Gold's Bardoc project and Capricorn Metals' Karlawinda project, both in WA, and Regis Resources' Mcphillamys project in NSW, each estimated to contain between 1.5 and 3Moz of contained gold.

In Victoria, AuStar Gold Limited (ASX:AUL) is also focused on increasing production through a regional exploration package, while its Morning Star mine recently achieved the impressive mined grade of ~16.5g/t.

Gold Price Skyrocketing

Despite some recent pressures, gold values have grown steadily in 2020, growing by 12 per cent from January to May and surpassing US$2,000 per ounce in July, as predicted by Barclay Pearce Capital. 

Goldman Sachs recently forecast that the gold price will exceed US$2,300/oz in the next 12 months, driven by industrial supply levels and investor demand, as gold continues to be seen as a safe haven in hard times.

While there are no certainties, even if gold prices were to unexpectedly fall, a significant drop would be needed before gold ceased to be a profitable investment option.

Coronavirus Boost

While Australian gold was expanding even before the COVID-19 pandemic, the surge of investment in gold this year will certainly be a factor in helping Australia to become the world leader, as well as creating opportunities for gold mining companies around the world.

In a year when many traditional investment options have fallen on hard times, gold has remained a stable foundation for investors at all levels. Interest in gold is expected to remain strong as Australia and the world at large weather economic uncertainty and the value of gold investment becomes ever more widely understood.

Barclay Pearce Capital client AuStar Gold Limited (ASX:AUL) is an exciting gold exploration, mining and production company with a portfolio of historical, near term development and current assets based around the Morning Star Gold mine located approximately 120 km east of Melbourne in the Walhalla to Woods Point gold field.

Find out more about AuStar’s recent operations and production update Learn more here.

Read about the Morning Star Mine 8 Level Diamond drilling program here.

AuStar's vision is to become the next mid-tier gold producer in Australia.

To keep up to date with their news and progress, and for more information about gold investment as a whole, subscribe to the AuStar Gold Chairman's List.