Economist and finance analyst Senyo Hosi has cautioned that soaring gold prices do not automatically lead to increased production, pointing to structural and regulatory constraints within Ghana’s mining sector.
In a statement dated Wednesday, January 7, Mr Hosi observed that despite record-high gold prices in 2025, large-scale gold production in Ghana declined from about 104 metric tonnes in 2024 to 101 metric tonnes in 2025.
He attributed the drop to the inelastic nature of gold supply, operational limitations, and regulatory challenges.
Mr Hosi explained that the conventional economic assumption that higher prices incentivise producers to increase supply does not always hold.
“Economics is often not a perfect math,” he said, drawing an analogy with rare luxury goods such as the 1945 Domaine de la Romanée-Conti wine, where scarcity renders price signals ineffective in boosting output.
He noted that gold mining is both labour-intensive and capital-heavy, with most large-scale mines already operating near full capacity. As a result, they are unable to scale up production quickly, even when global prices rise. While Artisanal Small-Scale Mining (ASM) operations are relatively more flexible, he said they faced significant regulatory constraints in 2025, including restrictions on new concessions and limits on the importation of mining equipment.
Mr Hosi also highlighted the impact of smuggling on official production figures. Citing analysis from SwissAid and UN COMTRADE, he explained that much of the reported increase in ASM output in 2025 reflected smuggled gold being channelled back into the formal system, rather than a genuine production response to higher prices.
According to him, government interventions such as GoldBod’s Domestic Gold Purchase Programme, enhanced legal enforcement, and the removal of withholding taxes were instrumental in regularising the gold market and improving official reporting.
He concluded that Ghana’s gold supply curve remains steep and largely inelastic in the short term. While higher prices may create incentives, constraints related to technology, manpower, and mine capacity limit the ability of producers to expand output rapidly.
Mr Hosi further urged the government to incentivise investment in large-scale mining, maintain strategic gold reserves, and leverage Ghana’s status as Africa’s leading gold producer to support industrialisation and long-term economic resilience.
“Higher gold prices alone cannot explain Ghana’s recent production increase,” he said. “Understanding supply inelasticity, smuggling dynamics, and policy interventions is critical for accurate economic analysis and sound decision-making.”
