As someone who has kept track of the "Peak Oil" movement for a few years now, it comes as no surprise that oil prices have risen nearly six fold since they hit rock bottom in the late 1990s. Does this mean Peak Oil has already arrived? Not necessarily, but we note that a final peak in global oil production needs to be preceded by a continual decrease in excess crude oil production capacity. When capacity reaches zero, then Peak Oil arrives. That capacity has been dropping now for several years.

But what can that current debate about oil teach us about gold? Gold, like oil, has been continuously rising in price for five years. Admittedly, its performance has been poor compared to oil, but does this price mechanism also indicate the mining equivalent of reducing "excess spare capacity" and is it also a prelude to "Peak Gold"? My conclusions led me to believe that these two commodities are similar in terms of a Hubbert's Peak analysis and in terms of the effects of a peak in global production.

Firstly, Peak Oil based on Hubbert's theory of oil production versus reserves states that production goes into decline at about the halfway point of remaining reserves. How does this play out for gold? Based on the United States Geological Survey's 2006 summary for gold, about 152,000 tonnes of gold has been mined out of the ground since man first dug out those shiny yellow nuggets.

Furthermore, the USGS estimates a remaining reserve base of 90,000 tonnes. So, from the point of view of peak being the halfway point of reserves, gold should have peaked at a remaining reserve base of 121,000 tonnes (152,000 plus 90,000 divided by 2). When was this the case? Backtracking 31,000 tonnes of global mining output gives us the year of 1993.

However, a look at the graph below of global mining production shows that gold output merely dipped in 1993 as recession hit the Western nations and then resumed a climb to a new high in the year 2000 (which has not been exceeded since). Now, despite climbing gold demand, mine output has been in decline since then.

Does this imply 2000 was the global peak in gold production? That would mean that out of a 4000-year time range of gold production, we have a seven-year error in estimating the peak, which doesn't look so bad after all!

But we have to understand that just like oil reserve figures, figuring out how much gold has ever been mined and how much remains under the ground in an inexact science. What we can be sure of is that the numbers we are using have never been more accurate as man's knowledge of the earth has increased.

Another evidence of a commodity production peak is falling supply in the face of rising prices and demand. In a free market, supply should increase to fulfill demand or demand has to fall. For some years now, the difference between new mine output and demand has been filled by scrap recycling and above ground stockpiles. However, this is where the peak argument gets contentious as the 1990s cutback in exploration is given as the explanation for the recent decline in production.

A similar argument is given to partly explain the tightness in oil supplies today. Oil plummeted from $25 to $10 a barrel between 1996 and 1998. Exploration budgets were cut and we are apparently suffering the consequences today. Okay, perhaps, but that argument is beginning to wear a bit thin after seven years and prices still at all time highs. Likewise with the production of gold, how long does it take to re-open uneconomic mines and get new ones up and running? Seven years and counting and once again prices are still at multi-decade highs.

But perhaps the most important warning sign of a commodity peak are major producing countries individually peaking before the overall global peak. In the case of oil, the USA, China, Britain, Norway and Mexico amongst a host of others are at or past their national peak of oil production. We only await the Middle East countries and Russia to join them and complete the picture.

In the world of gold producing countries the picture is interesting if we examine a chart produced by the World Gold Council. If the reader clicks to that page (http://www.gold.org/value/markets/supply_demand/mine_production.html) and scrolls halfway down they will observe the multi-colored graphics for each major country and region.

In summary, South Africa peaked in the 1970s at 1000 tonnes (yet is still the main producer). The USA peaked in 1998 at 366 tonnes while Australia peaked in 1997 at 314 tonnes. Canada peaked in 1991 at 177 tonnes and Brazil in 1982 at 200 tonnes and so on. These example regions when combined currently produce 40% of the world's gold. If this 40% declines at 5% per annum then the other 60% has to increase production by 3% just to keep production flat. This is not a pretty picture - unless you hold gold.

Just like oil, the relatively few "giants" of gold production are being replaced by a host of smaller "minnows". Just like oil, gold explorers are finding less gold in lower grades of quality. In terms of oil, the gold Ghawars and Cantarells have long been discovered and exploited. It is now basically a mopping up operation at the edges of exploration.

It seems to me that Peak Gold may well have arrived. When Peak Oil arrives as well, then Peak Gold will be confirmed because increasingly higher energy costs will make many mines uneconomic and gold above ground will become far more expensive than gold shut in underground. Unless, of course, gold vaults into the thousands of dollars to offset energy costs!

This is what we call the "New Era" of investment. It is an era when hard assets will no longer be taken for granted and seen as cheap and easily accessible. They will become rarer and harder to extract and will remain so for decades to come.

Roland Watson writes the subscription newsletter New Era Investor. For further details, please go to www.newerainvestor.com for his latest entries and click on the "View Sample Issue Here" link to the right. Comments are invited by emailing the author at newerainvestor@yahoo.co.uk.