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TheStreet Open House

Gold, Silver Prices Struggle for Momentum

"China's central bank is possibly ready to raise its gold reserves," says Gregory Marshall, author of Good as Gold. "Gold and silver prices may be volatile this year, but the bull market is still in place."

There have been several reports circulating that China will buy more gold, but the country tends to amass it in secret for fear of moving the price. If China has been buying gold, the boost to gold will already be accounted for. Nevertheless, the headline would be good for gold as investors can use it as a bullish excuse to buy.

Gold mining stocks, a risky but profitable way to buy gold, were mixed. Yamana Gold (AUY) was 0.5% lower at $11.78 while Kinross Gold (KGC) was down 0.6% to $16.85. Other large gold stocks Agnico-Eagle (AEM) and Eldorado Gold (EGO) were trading at $72.21 and $16.61, respectively.

Randgold Resources (GOLD) was popping 4.2% to $83.32. The company reported fourth-quarter earnings popped 43% year over year. Gold production was up 30% quarter on quarter at 132,099 ounces but that figure was down 10%. Growing pains at its Lulo mine seem to be worked out as the mine's hedge commitments are completed which should give Randgold more juice ahead. Also, Randgold's Ivory Coast mine, Tongon, is ramping up production on its first gold stream after work was slowed due to political unrest. Randgold also announced a dividend increase of 18%.

The thorn in Randgold's side is its cash cost,s which were $766 an ounce, well above its peers. The lowest-cost gold producers boast cash costs of $330 an ounce. The company expects to produce between 750,000 and 790,000 ounces of gold in 2011 with cash costs of $600 an ounce. Its ultimate goal is to become a producer of 1 million ounces of gold.

Harmony Gold (HMY) was up 1.4% to $11.03 after the company said it made 10 cents a share in its second quarter and gold production was 323,275 versus 336,650 in the previous quarter.

-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.

>To follow the writer on Twitter, go to http://twitter.com/adsteel.

>To submit a news tip, send an email to: tips@thestreet.com.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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