The gold price looks set to post its second consecutive quarterly gain later today. It is currently hanging around its two-month high of $1,325.90. Silver is also ready to post its second-quarterly gain but has extended a drop in price.
The price of gold recovered overnight losses after the release of US Federal Reserve meeting notes in London trade Thursday morning, rising back to $1,375 as major stock markets also rose with commodities.
As the West flees the precious metal, another set of gold buyers has come forward with the aim to preserve wealth. While mining production is around 1,134 tons so far this year, gold delivery on the Shanghai Gold Exchange is 918 tons.
"[Mining] is not sustainable...where the gold price is at the moment," said Nick Holland, CEO of Gold Fields – the eighth largest gold miner in 2012 – yesterday. "We're going to need at least $1,500 an ounce to sustain this industry in any reasonable form."
The upside to gold stocks is that investors historically have received a 2-to-1 leverage by owning gold equities instead of the commodity. We believe that effective management can help miners gain more leverage over the metal for their shareholders.
Wholesale gold bullion prices rose to $1,725 an ounce Thursday morning, recovering some ground after yesterday's sharp drop during US trading, as stocks, commodities and the euro also gained and US Treasury bond prices fell.
Wholesale market gold prices extended their gains from a day earlier Tuesday, rising above $1,690 an ounce in London this morning – 1% up on yesterday's two-month low – while stocks and commodities also ticked higher and US Treasury bonds fell.