Gold is seen as a safe haven thing,however the metal is rallying with hopes that the EU comes up wid a brilliant plan. The plan is successful may restore global demand, however gold does not fit into the traditional supply/demand criteria of other commodities and metals. Very puzzling??????
This is just a theory. Gold mines have underperformed physical gold for some time now. With etf's like ABSA's New Gold it became easy to get exposure to gold without owning the mines who are perceived as risky investments at best. At current rand gold values the mines "should" be making a healthy profit which "should" result in dividends for shareholders. If the rand gold price is staying at current levels you "should" make a better return on gold shares than physical gold. So perhaps investors are moving some of their physical gold holding into the mines.
Monetary dilutions push gold as a better holder of future purchasing power. As long as policy is forced into ongoing monetary dilutions then gold will remain in vogue. Should inflation return to the screens, same effect. Gold shares are thereby cheap relative to their peculiar parameters.