Finding these deposits requires large-scale exploration efforts. And exploring for and eventually developing gold mines demands massive amounts of capital. This is a major reason why gold bulls are secular in nature. Gold prices need to be high enough, for long enough, to give mining companies the incentive to perform gold exploration and development.

Coming out of a bear the miners were settled into a prolonged period of low prices where there was no incentive to spend money on exploration. And after years of neglect in this area the pipeline of major gold discoveries and mine development projects runs thin. It can take up to 10 years and billions of dollars to build a large-scale gold mine. So perhaps it is no wonder production lags in the first part of a gold bull, such as we are seeing today. It can be looked at as a bear-market-recovery period.

Scott Wright is good in his analysis here!