(Bloomberg) -- Gold’s dimming supply prospects have caught the eye of one billionaire.

“For the first time in my life, I bought gold because it is a good hedge,” Sam Zell, the founder of Equity Group Investments, said in a Bloomberg TV interview. “Supply is shrinking and that is going to have a positive impact on the price.”

Spending on new mines began to dry up after prices of the metal tumbled from a record in 2011, clouding the outlook for production. With gold still down by almost a third from its peak, the biggest miners are just looking at buying their competitors in a bid to bolster their output pipeline.

“The amount of capital being put into new gold mines is a most nonexistent,” Zell said. “All of the money is being used to buy up rivals.”

The combined gold reserves still buried in mines -- an indicator of production prospects-- shrank by more than 40 percent in 2017, from its peak after companies cut spending on exploration and development of new projects, according to Bloomberg Intelligence data on big producers.

--With assistance from Alix Steel and David Westin.

To contact the reporter on this story: Luzi Ann Javier in New York at ljavier@bloomberg.net

To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Joe Richter

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