I can understand why investors are selling their large-cap gold stocks. They aren’t making any money — at $900 gold! And they’re trading at 20-50 times earnings. Still, while the rising cost of producing gold is trouble for gold stocks, it is also one of the most bullish factors underpinning gold values.
Effectively, $700 gold would be as catastrophic for the industry today as $300 gold was in 1999.
With jewelry demand alone, the supply side is already tighter than it is in oil.
I was looking for reasons to buy gold that have not been widely discounted. Therefore I have listed Top 10 Reasons to End Cheap Gold
• Cost inflation slows down the development pipeline, hence future production growth in mining will be curtailed.
• Political risks in frontier countries also shrinking available supplies
• Faltering global economy persuading central bankers to abandon tightening plans
• Soaring government deficits
• Saber rattling between Iran and Israel and other geopolitical tensions heating up
• Another GLD ETF just listed on Hong Kong Exchange
• Some countries already experiencing crackup and heightened gold demand
• Shrinking official gold supply
• Seasonal trends turning bullish again into the new year
• Large producer Anglo has yet to cover all its hedges.

So if you own some gold mining shares hang on they are a long term investment.