Gold is back on the radar screen of some risk-averse U.S. investors but it's rating much higher in several other countries were a modern-day gold rush appears to have started.
In South Africa, once home to the world's biggest gold-mining industry, the price of gold has hit an all-time high of more than 19,300 rand, the local currency.
In Australia, another big gold producer, the local gold price is within sight of an all-time high, briefly rising above A$1700 an ounce earlier today.
In both South Africa and Australia gold is being propelled up by two forces. A higher U.S. dollar price and a lower local currency.
Good News In Cape Town
For delegate attending Africa's biggest resources conference, Mining Indaba in South Africa's southern port city of Cape Town, the higher gold price has brought welcome relief from the crash in most other metals which have forced widespread mine closures and mass job losses.
Over the past three years as prices for platinum, iron ore, coal and gold have fallen sharply an estimated 46,000 miners have lost their jobs, with more to come as mining companies continue to drive down costs.
It has been a similar picture in Australia where the important resources sector has been buffeted by falling U.S. dollar prices with a 30% fall in the Australian dollar the only good news for most miners.
$1200 An Ounce Within Sight
Over the past few weeks, as the U.S. dollar gold price has moved back to within sight of $1200/oz, the benefits of an exchange rate which has fallen to around 70c can be clearly seen in the Australian gold price, and the share prices of Australian gold miners were a mini-boom is underway.
On the Australian stock market earlier today every index, apart from gold, was glowing red as investors scurried for the exits as doubts continue to grow about economic growth, especially in China, Australia's major trading partner.
A 2.8% fall in the key stock market index, the all ordinaries, was offset for mining investors by a 7.9% increase in the gold index.
Newcrest Up 8.2% On The Day
Leading gold miners led the way with Newcrest Mining, the biggest Australian gold producer, outperforming the index with a rise on the day of 8.2%, taking the stock's rise since the start of the calendar year to 27.5%.
Other Australian gold stocks to perform strong earlier today included Northern Star, up 7.7% to close at A$3.63, down slightly on its all-time high of A$3.71 achieved in early trade. Evolution Mining added 6.4% to A$1.82 while Regis Resources led the way on a percentage basis with a one-day rise of 12.3% to A$2.83.
The surge of interest in Australian and South African gold stocks is being magnified by the currency effect but can also be seen to a limited extent in leading North American gold miners such as Newmont which added 3.3% yesterday to $25.21 on the New York Stock Exchange and Barrick Gold which rose by 2.3% to $11.91.
Funds Flow Into Gold ETFs
Interest in gold as the global financial system comes under renewed pressure can also be seen in a sharp increase in the flow of funds into exchange-traded gold funds with the biggest fund, the SPDR Gold Trust, enjoying a 4% increase in funds last week, its biggest weekly gain since March, 2009.
Most gold investors see the U.S. dollar price as the most relevant measure of interest in gold but because of the metal's twin roles as a commodity and currency the effect in some gold mining countries can be exaggerated.
South Africa's record gold price is as much a function of the weaker rand which is down from 11.60 rand 12-months ago to the dollar to 16.15 rand today. Five years ago the rate was 7 rand to the dollar.
Australia, which has seen its dollar fall to around 70c is on track to hit a record high gold price in the next few days if the current trend continues.
The latest price of A$1691/oz is just A$33 short of the all-time high of A$1724/oz reached in October, 2011, a time when the Australian dollar was flying high, and before the commodity crash knocked it down.
