The Golden Gap: Why Private Capital Is Becoming Essential to the Future of Gold Production

By Colin Boscher, Co-founder and CSO at Nuway Capital and Zara Shirwan, Founder at SigraFi

Gold has always attracted attention when markets feel uncertain, something we’re currently seeing with rising geopolitical conflicts. But the wider story is not only about the rising price of gold; it is also about the growing gap in how gold production is funded.

Smaller producers are beginning to play a more meaningful role in gold’s global supply, accounting for roughly 20% of the market, with annual production valued at more than $100 billion at today’s prices. Yet many of these businesses are finding it harder to access the capital they need to expand. The result: an estimated $6.5 billion annual funding gap for small and medium-sized gold producers as stricter regulations and shifting risk appetites reshape bank lending across SME trade financing more generally.

Private capital is beginning to step into that gap, offering funding in exchange for future gold supply at a discount to the market price. This is more than a niche change in mining finance; it reflects a broader shift in how capital is flowing, and how investors are approaching real assets.

Why the funding gap is widening for smaller gold producers

For years, gold production financing for smaller and mid-tier producers flowed through traditional bank lending to fund equipment, processing and expansion. But that landscape has changed. Basel III, the global banking reform framework introduced after the financial crisis, required banks to hold more capital against less collateralised lending. This has made smaller exposures less attractive, particularly in emerging and frontier markets where much of the world’s gold is produced.  

As a result, capital is increasingly directed toward larger, more collateralised borrowers, while smaller businesses – many of which were already underserved – are finding access to formal financing narrowing even further.      

It’s certainly not the case that these producers have no demand for their product. In fact, gold demand remains strong and is forecast to continue to rise, driven by central banks and private investor demand. The challenge is that smaller producers now sit in a part of the market that banks find harder to serve. 

But that retreat is creating a clear consequence: a funding gap in a part of the market that produces a significant share of the world’s gold, restricting their ability to scale production at a time when global gold demand is rising, and large-scale mine production has reached a plateau. 

How private capital is moving into the gap

As traditional lenders become more cautious, a new opportunity has opened up for private capital to play a larger role in parts of the market they have left behind. In our view, this is not just a funding shift. It reflects a broader change in how investors think about risk, return, and access to real assets.

One model private capital is adopting is to address this ‘golden gap’ head on – funding established small and mid-sized producers in return for future gold supply at a fixed percentage discount to the market price. For example, through our partnership we provide secured capital advances to producers today, in exchange for the right to purchase future gold output at an agreed percentage discount to market price. Rather than relying on interest payments, the return is generated through the margin created when that gold enters the market.

What matters here is the thinking behind the model. Much of the conversation around gold investing still centres on where the price might go next. But that is only part of the picture. There is also value in understanding how gold production is financed, how it moves through the supply chain and how access to production is secured in the first place.

By building returns on a pre-agreed discount on future supply, the investment case becomes less about predicting price movements and more about participating in the production of a real asset. Investors gain exposure to gold through the economics of the supply chain itself, while producers gain access to growth capital at a time when traditional funding has become harder to secure, allowing them to scale their gold production to serve market demand     

What this means for producers, investors and the wider economy

For producers, this is significant. Many smaller gold-producing businesses, including miners, tollers and aggregators, are not seeking funding to launch new ventures, but to expand existing operations, improve processing capacity or increase production. Models like this allow producers to secure the funding they need to grow. 

Meanwhile, for investors, the appeal is not only gold itself, but the way cash flow is generated. This is an investment in the supply chain, not just a bet on the price of gold.

Furthermore, for the investment community, there is also a broader lesson. When regulation makes older banking models less attractive, private markets do not simply fill gaps at random. They often build new routes for capital into sectors that matter. In this case, private investors can play a more active role in financing real-world production, gaining direct exposure to the supply chain economics of gold, not just its price.                

A smarter alternative to speculative gold investing

Many people access gold through bullion, mining shares, or exchange-traded funds. Each has its place but is still closely tied to price swings and market sentiment. 

Structured gold investments are not risk-free and should not be described as such. But they may offer a more disciplined route into the sector because the return is linked to a pre-agreed discount and physical supply flow, rather than to short-term market emotion.

Ultimately, as traditional lenders continue to retrench, private capital is no longer watching from the sidelines; it is building a new role at the heart of the gold market. The future of gold investing may depend less on predicting the price of the metal and more on who is willing to finance the producers who bring it to market.