Canadian stocks posted a high on Thursday as gold prices steamed ahead and financials rebounded. Toronto’s main stock index was higher, lifted by strength in mining companies as gold prices got a boost from safe-haven buying. The resource-laden materials group rose 2.9 per cent and led the index higher, reported Reuters. Among gainers were miners Barrick Gold (ABX.TO), up 2.8 per cent at C$47.00, and Kinross (K.TO), up 3.3 per cent at C$22.19.

“Gold appears to be the one bright spot in the market again,” said Michael Sprung, president at Sprung & Co. Investment Counsel. For some time now, Canadian financials have been pressured by “extreme negative sentiment on the U.S. financials side,” said Vincent Delisle, strategist at Scotia Capital, in Montreal.

But world over, as the global bailout bonanza continued, the price of the yellow metal continued to firm up. Japan announced that they will spend up to ¥1 trillion ($11.2 billion) to buy shares held by banks. This supported the Japanese stock market briefly, but gains proved unsustainable as poor earnings outweighed the latest bailout.

China’s premier Wen Jiabao suggested that his country is considering additional stimulus as well. This would be on top of the 4 trillion yuan ($585 billion) package that was launched late last year.

Australia did announce a second stimulus package worth A$42 billion ($26.5 billion). Most of those moneys will be spent on infrastructure, schools and housing, but about 30 per cent will be used for cash handouts to lower and middle-class earners. Those stimulus checks are slated to go out next month.

On the stock markets, gold climbed overnight and ended $12 higher. Gold was as much as 2 per cent higher on Thursday after the European Central Bank left interest rates on hold and the Bank of England cut its key rate, buoyed by buying of the metal as a haven from risk. “We are seeing more investor interest in gold,” said Citi analyst David Thurtell. “Some like it as a safe haven in times of high economic uncertainty, and others like it as a hedge against inflation.” V M Group analyst Matthew Turner said, “Today’s moves were just a confirmation of that theme.”

Interest in physical bullion in the form of coins and bars and investment products such as gold-backed exchange-traded funds continues to soar. Investors also fear the large amount of government debt poured into the banking sector will fuel inflation. “The fact that gold as an asset class has more trust in it than a lot of other financial products out there at the moment means people are continuing to push money in there,” said Commerzbank trader Rory McVeigh. “There has been steady buying of small investment-type physical gold, particularly in Europe, and exchange-traded funds.”

Gold Forecast

Goldman Sachs lifted its three-month gold forecast to $1,000 an ounce from $700 an ounce, citing safe-haven demand for the metal. “The gold price rally has been driven by surging demand for gold in all forms: physical gold, exchange traded funds and futures contracts and investors seek a safe store of value,” the bank said in a note. “It is also important to emphasise that the recent strong demand for gold has not been irrational, but rather pretty much in line with the probabilities of financial and sovereign default,” the firm added.

As investors seek hard asset and value equity plays through collateralised investment vehicles, ETF Securities’ Gold Equity Fund has risen by 90 per cent. The ETFS Russell Global Gold Fund (AUCO) which tracks global gold mining companies has been the best performing ETF, rising by 90 per cent since October 28, 2008. This compares to a 22 per cent rise in the gold price over the same period.

Gold companies have benefited from investors’ increasingly bullish view on the gold price, with gold companies providing leverage on further gold price gains.

SPDR Gold Shares, (GLD), the largest gold ETF, reported adding another 11.02 tonnes to show 843.59 tonnes of gold bars held for its investors by a custodian in London. The metal held by the trust as of last week was worth $24.9 billion.

Canadian Gold Hunter (TSX:CGH) has reported additional gold assays from the Caballo Blanco project in Veracruz, Mexico. Core hole 08CBN-029 intersected 36.58 metres grading 1.13g/t Au (grams gold per metric ton) on the Cerro la Paila gold target in the Northern Zone. Typically, gold and silver in this high-sulphidation zone occur in iron-oxide-cemented, vuggy silica breccias. The company can earn a 70 per cent interest in the Caballo Blanco project from Almaden Minerals Ltd. by spending US$12 million over a period of six years.

Prospectors who discovered what is believed to be the biggest untapped gold mine in Ireland or Britain have struck lucky again. The exploration company which uncovered the precious metal outside a small village in the Republic of Ireland last year said they have found a larger, higher grade seam several miles over the border in south Armagh. Share prices in Conroy Diamonds and Gold (LSE:CDG) rocketed after it formally announced the value of the massive deposits at Clay Lake, near Keady, to the London Stock Exchange.

Professor Richard Conroy, the firm’s chairman and a former Irish senator, said there was a lot of work ahead but the mine could be worth hundreds of millions of euro. “We’re very excited about this, we’re delighted with it. We’ve felt for a long time that there must be something big there,” he said. Conroy began moving into the North after striking gold in the rural, rolling hills outside Clontibret, Co Monaghan, where it has begun a feasibility study, which could allow mining to begin within two years. The deposits there were valued last July at up to €570 million, but gold prices have soared since then, as it traditionally does in times of economic uncertainty

Capital Gold has continued its streak of record production. Gold produced was up by over 1,750 ounces compared to last fiscal quarter. Capital Gold (TSX:CGC) has produced 13,646 ounces of gold in the second fiscal quarter of 2009 (ended January 31, 2009) at its El Chanate mine in Sonora, Mexico. This represents a 15 per cent increase over the fiscal quarter ended October 31, 2008 and a 39 per cent increase over the same period in the prior fiscal year.

Metanor Resources, an unhedged gold producer in mining friendly Quebec, is poised for significant upside revaluation, with over 20,000oz gold poured to date. With four months under its belt after dawning status as an official commercial gold producer, Metanor Resources Inc. (TSX-V: MTO) has near term plans to increase capacity up to 1200 TPD at nominal capital expenditure.