Follow the yellow brick road. Remarkably, this advice from a village of munchkins almost 70 years ago remains decidedly relevant for investors today. Thanks to a stunning series of admissions by gold industry executives, it is now apparent that a concrete floor paved with yellow bricks is currently under construction beneath gold at the $700 level.

Although the specter of inflation and lingering weakness in the U.S. dollar has already built a case for gold that's rock solid, emerging information about what it costs to mine the metal predicts a parallel, powerful upward catalyst for the price of gold.

This week, Barrick Gold (NYSE:ABX) CFO Jamie Sokalsky announced that the break-even price for gold projects industrywide currently falls within the $700-$800 per ounce range. Sokalsky's statements come on the heels of another recent assessment by Gold Fields (NYSE:GFI) CEO Nick Holland, who stated, "The all-in cost of production in a gold mine, including ongoing capital to keep it going, is probably around $700/oz."

The "all-in" cost metric they're referring to is the broadest measure of miners' investments in gold projects, including costs incurred through acquisition, exploration, development, production, maintenance, and depreciation. While the more widely followed cash cost of production per ounce is a key metric for tracking real-time profitability and cash flow, the all-in cost is crucial to the strategic decision-making process for mining executives.

The surprisingly slender margin between the current spot price around $875 and a cost basis of between $700 and $800 will have a negative impact on the economic feasibility of future projects. If gold prices remain at today's levels, in Sokalsky's words, the high costs will "make some new projects that the industry has difficult to bring in and that's going to be very bullish for the gold price."

As a snapshot, these comments by executives of two of the world's major gold producers make it clear that something has to give. Given that the established trend for mine operating costs is clearly higher, as recent evidence from Newmont Mining (NYSE:NEM) and Kinross Gold (NYSE:KGC) shows, this Fool is compelled to conclude once again that the road to the emerald city of profit is paved in yellow bricks of gold.

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