Both owe a great deal to Doug Pollitt's Denver Gold 2014 presentation which deserves a full read.
It is really quite amazing that we chucked billions and billions and got no supply response at all. What this tells us is that there is simply not a lot of gold out there. How many genuine finds were there in the last cycle? Half a dozen? A dozen? In fifteen years we might have discovered enough new material to keep the mills turning for two or three years. The raw material was just not there, even in the face of the avalanche of money to tease it out.......... To step back and re-cap: being an asset class unto itself which from time to time comes into favour generates substantial investment demand. Gold is a small sector to begin with – lots of money into a small sector drives down the cost of capital and encourages issuance. Against this there are fewer still opportunities within the small sector to invest the incoming capitalThis leads to gross misallocation of capital as the financial sector chases scale, growth and leveraged returns in marginal projects. As Saville discusses elsewhere buying low value ounces in the ground was once a successful strategy, but not now. As Rick Rule has discussed this leaves a marginal industry as prices fall.
There are suggestions that some companies are becoming better allocators of capital.
It also supports Brent Cook's repeated thesis that a more rational industry will be even hungrier for quality junior projects and discoveries when the market does turn.