A “Supergiant” Gold Deposit, Diluting the Value of the Traditional Store of Value

A massive gold deposit—the largest ever found—has shaken the precious metals industry. After all, it's a monumental discovery. But it also challenges gold's status as the ultimate store of value. At the same time, Bitcoin—often called “digital gold”—is strengthening its position as the world's hardest asset.

A massive gold deposit—the largest ever found—has shaken the precious metals industry. It's a monumental discovery that challenges gold's status as the ultimate store of value. At the same time, Bitcoin—often called “digital gold”—is strengthening its position as the world's hardest asset.

So, what does it mean for Bitcoin and for gold? Well, let's find out!

“Supergiant” Gold Deposit, Diluting the Value

The discovery of the massive gold deposit was made last month in China's Hunan Province and was reported by the Chinese State Media.

Interestingly, China is already the world's largest gold producer, with its gold reserves estimated to be over 2,000 tons as of this year. The world's second-largest economy also accounted for around 10% of global output last year.

According to the report, geologists found several gold veins in the Wangu gold field. Found 2,000 meters (2 km) deep in the field, they contained a reserve of 300 tonnes of precious metal.  

The exciting part is what was found even deeper. The gold reserves at the site are estimated to be massive 1,000 tonnes within a depth of 3,000 meters. 

“Many drilled rock cores showed visible gold.”

– Chen Rulin, an expert at the Geological Bureau of Hunan Province

He further shared that a tonne of ore in this range contained as much as 138 grams of gold.

The value of the newly discovered deposit is 600 billion yuan or approximately $83 billion. So, it makes sense to be concerned.  If the new discovery ultimately proves to be true, which early examinations point to be potentially in billions of ounces, that would make it the largest gold deposit on Earth.

The thing is, not all gold deposits can be categorized as supergiant. For one to be titled as such, the natural gold collection has to be formed under special conditions, which leads to concentrations that surpass those in typical mines.

As such, the new gold deposits can have a significant impact on not only local economies but also global markets due to gold's crucial role as a stable asset and a hedge against financial uncertainty.

Notably, this isn't even the first time such large deposits have been found. Time and again, we have come across discoveries that have unveiled new gold. 

In s2022, exploration surveys showed that Uganda had gold ore deposits of about 31 million tonnes, with a value of an eye-boggling $13 trillion. A Chinese gold mining company, Wagagai, has been granted the license to produce part of these gold deposits. In 2023, the country's gold exports also surged over 10 times from the previous year to $2.3 billion.

Gold is not only being uncovered in countries, but it has also been found in asteroids. The reports first came in 2019 of asteroid 16 Psyche containing as much as $700 quintillion worth of gold. For context, 1 quintillion has 18 zeros; yeah, you read it right.

So, what does it mean for gold? Well, simple economics says that if supply increases while demand remains constant, it leads to a drop in prices. That means gold isn't really the hard asset as we have known it to be all this time.

Is Gold's Status in Danger?

First, let's get into some introductory economics, which is the fundamental principles of economics — the law of demand and supply.

So, there is an inverse relationship between demand and price while a direct relationship between supply and price. 

What this means is when the demand increases without a change in supply, the price of an asset increases as more people want to buy it, but there's only a particular amount of it available in the market.

Now, if the reverse happens, i.e., the supply increases, which means there is now more of a particular asset in the market while demand is the same, then it negatively affects the prices.

When demand matches supply, the price is in equilibrium, which is acceptable to both buyers and sellers. What about when both the demand and supply increases? Well, then, the equilibrium price remains the same. 

Now that you know the economics behind the demand and supply, you can understand why there's always so much discussion surrounding these new gold deposit discoveries. 

We all have known gold to be a finite resource, which means there's only a certain amount of it on our planet, and even that is harder to find. Data suggests that so far, about 212,582 tonnes of gold has been mined throughout history. Interestingly, only two-thirds of it has been mined in the last about 74 years.

However, as