I've discussed this phenomenon at length under EVN thread. The...

I've discussed this phenomenon at length under EVN thread. The fact is when you buy a gold mining company you are only partially participating in the stock market. Most of the time you are really participating in the gold market. This guy explains the gold market and the players quite well...
Belangp - Know the opponents

As you can see there are a few parties involved and a gold miner profiting is not as simple as the gold price, all in sustaining cost and troy ounces in production. The wheeling and dealing in the gold market has a lot to do with profitability it also... It's a good start and I wish he explained Gold leasing/GOFO rate a bit more. He also missed out on another player - Chinese arbitrageurs but it's an old video and they are kind of a more recent phenomenon. This is where the current Australian gold miners SP bull run is coming from... Believe it or not China produces more ounces than any country in the world but at the same time the Gold does not leave China. In fact they are also the largest importer of gold and they facilitate it via arbitrageurs through a non-open market operation - streaming, futures and any other derivatives you can think of. Jake Klein (EVN) having come from the Chinese gold market knows this best.

The real question really is why is this happening... i.e. why is China buying gold at any cost to the benefit of Australian gold miners? The answer has to do with the currency war that's been raging between USA and China. The aim of the game is to keep your currency down but not so down that inflation and currency value destruction becomes a hyper inflation snowball. The only real way to stop this from happening is for China to build it's reserve and actually for the Yuan to become a reserve in itself. If you de-value your money (money printing) and insure you don't cause hyper inflation then you need to backstop it with gold reserves. The second answer is that Yuan/RMB is now officially convertible to gold How do you prevent a run on gold? by giving the market confidence that there is enough gold for everyone should that notion ever come to be and hence Chinas gold reserve increases with all these Chinese shadow gold buying.