It could well be that the gold price breaks through the $1,000-an-ounce barrier this month with financial markets still volatile and a power shortage halting production at South Africa's mines, the biggest the world. The emergency interest rate cuts by the Federal Reserve in January down to three per cent also increase the attractiveness of gold over cash, as gold pays investors no dividend. That is perhaps why the yellow metal overcame its previous all-time high of $850 and romped past the $900 mark. However, gold shares have headed in the opposite direction. Perhaps this is understandable in the case of the South African miners hit by a total shutdown, with annual profits under threat. But for the rest of the gold mining community higher gold prices automatically translate into higher profits.
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