There are quite a few commentators who argue that investors should primarily own bullion; (reduced risk) and the introduction of the ETF hasn't helped the miners case at all. As you rightly say, the returns on shares because of the additional risk involved should outweigh the returns on bullion; even more in the junior sector because the risk in owning juniors is far higher than majors.

What will force the price of the shares up on lower buying volume is lack of selling. Many 'weak hands' left the market on the way down, and in the companies where fundamentals are good, remaining buyers are unlikely to unload at this potential wave three in the gold metal cycle. What happened back in the seventies is that the price of gold metal (and therefore shares I presume), rose with great (and un-back-filled) gaps on a daily basis. Buyers seeking shares in an environment of low liquidity. With reduced nos potential sellers, we may entertain the same situation again, as and when the metal becomes too expensive for many to acquire, but producers profiting from the higher gold prices, in full production, with all potential nasties known, are then regarded as being the next best bet.

Several of my juniors had a positive bounce yesterday and look as though they are moving out of the sideways trend. While owners of debt might be interested in hedging it, remember that the hedge itself becomes a risk in a rapidly rising market, and gold looks as though it's emerging from a coil. If that is the case a parabola is a possibility. The administration has probably supported the banks selling gold to support 'an orderly descent of the dollar', mostly likely excacerbated by banks manipulating the idea that money is best left in low interest bearing accounts rather than in gold which doesnt support fractional reserve distribution; but as we know gold is the store of value of choice in Asia and the Middle East, and those markets will continued to support it regardless, plus as you suggest, reduced investment in the mines ultimately means higher gold prices as a result of reducing w/wide productivity.