GOLD PRICE NEWS - The gold price gained $15 to $1,132 per ounce last week, as stock and commodity prices surged higher. The rally in the price of gold, combined with declining risk aversion, led to broad-based appreciation in the shares of gold stocks. Both the Market Vectors Gold Mining ETF (GDX) and the Philadelphia Gold and Silver Index (XAU) closed the week with strong gains of 5.8% each, moving the two widely-followed gold stock benchmarks into positive territory for 2010.

Both oil and copper moved higher alongside the gold price over the course of the week, with the former hitting 17-month highs and the latter rising 4.3% in this past week alone. Investors’ risk appetites returned, evidenced by the 11% decline in the VIX - which traded down to its lowest level since May of 2008.

The successful issue of 5 billion euros of Greek government bonds increased confidence that Greece would be able to raise the funds necessary to roll over its debt obligations that come due in coming months. Credit default swap prices fell on Greek government debt and bond yields declined, helping to spur a global stock market rally. The S&P 500 rallied 3.1% on the week, Japan’s Nikkei 225 rose 2.4%, and London’s FTSE 100 appreciated 3.6%. Liquidity from central banks remains abundant, a phenomenon that has helped push the gold price up nearly $100 from its February lows and has made gold stock funds the month’s best performing category of equity vehicles.

A strong gold price and declining valuation multiples amongst gold stocks has led to renewed interest from generalist investors. Barron’s weekend issue profiled MacKenzie Davis and Ken Settles, co-portfolio managers of the RS Global Natural Resources Fund. The investment professionals highlighted Canadian-based Goldcorp (GG) as one of their top picks. Davis noted that Goldcorp “has generated about 20% returns annually over the last 15 years…It owns large, low-cost gold projects in Mexico…It also has a large foothold in the Red Lake district in Canada, one of the best gold-mining regions in the world.”

Despite the correction off their early December highs, the gold price and the shares of gold mining producers remain in upward trends. Governments across the globe, similarly to Greece, face a mountain of debts and deficits that are preventing central banks from normalizing monetary policy. With a tenuous employment situation, Chairman Bernanke and the U.S. Federal Reserve remain committed to keeping rates near zero “for an extended period of time” despite improving economic data, including the service sector growing at the fastest pace in over two years.

Inflation expectations are muted, evidenced by the tepid rise in government bond yields last week despite surging stock markets. Until bond vigilantes force the hand of central bankers, the monetary spigots will remain wide open and the longer-term path of the gold price and gold mining stocks appears to be in the same direction that has made the sector the best performing asset class of the past decade.