As U.S. deficit ceiling talks continue to waver and the debt crisis in Europe seems to be reaching new pinnacles of frightening altitude daily, investors are harkening back to the safe haven of gold (NYSE:GLD) in droves this week. And its not just gold commodity prices that have seen substantial gains this in recent weeks, hitting record highs, but also gold mining stocks that are starting to reap from some of the metal’s big gains in trading. MarketWatch reports that “the SPDR Gold Trust (NYSE:GLD) advanced $1.15, or 0.8%, to $153.91 in Wednesday afternoon trading, but the gold-miner ETF (NYSE:GDX) rose $2.25, or 4%, to $59.64,” with William Lefkowitz adding, “It’s a bet on whether you think the U.S. government will find a resolution” as mining stocks tend to”move with the price of gold, but more dramatically. The gold story is a fear story.”
Mining stocks have seen unusually high trading volumes this week says MW, noting,”Volume in bullish calls to buy shares in Barrick Gold (NYSE:ABX) hit the highest level since May. The action in call options outpaced bearish-looking activity as traders picked up 47,000 call options compared to 18,000 puts. Barrick’s stock advanced $1.84, or 3.9%, to $48.88 in Wednesday afternoon trading. US Gold Corp. (NYSE:UXG) also saw heavy activity, in this case targeting November-expiry call options granting the right to buy the Toronto-based company’s shares at $7.50. The stock leapt 59 cents, or 9.8%, to 6.64.”
Adding to the Gold (NYSE:GLD) frenzy today was an interchange between Federal Reserve Chair Ben Bernanke and Rep. Ron Paul in the former’s testimony before the House of Representatives. Paul, who supports a return to the gold standard, questioned Bernanke pointedly, “do you think gold is money?” to which the Fed Chief responded, “No.” Paul retorted, “Then why do central banks hold it?” to which Bernanke responded, “long-term tradition.” The dialogue prompted an outburst of criticism, directed towards Bernanke and his refusal to acknowledge the inherent trading value of gold.