This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

6 Stocks to Play for Lower Gold Prices

Stocks in this article: GLD DGZ SIG TIF NILE ZLC

Investors Shorting GLD will profit if gold prices continue lower. On the supply side, shorting mining companies can be tricky. Most mine several products and lower prices can take a long time to impact depending on how much a company is hedged (already sold future production). Few companies are not at least in part hedged; however, shorting mining companies is not for the faint of heart.

The DB Gold Short ETN DGZ (SFLY) offers equity similar to an ETF, but unlike GLD, share price should rise as gold falls. DGZ is thinly traded; however the spread is tight with large bid and asks. Owning a "short" ETN has other hazards, resulting in DGZ not being appropriate for most long term investors.

7 Dividend Stocks You Can't Ignore Right Now >>

There are other ways to profit from falling gold prices without shorting. On the demand side, companies that consume gold have lower input costs with lower gold prices. Jewelry stores reportedly use over 80% of gold consumed each year. Naturally, one can expect jewelry stores to benefit from lower costs. Coins and bullion make up the next largest consumer, followed by the electronics industry (gold is a great conductor of electricity).

Tiffany & Co. (TIF) through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry. Tiffany trades an average of 1.6 million shares per day and has a marketcap of $7.8 billion. Tiffany is the largest public company by market cap in the jewelry industry I reviewed. Tiffany sells much more than jewelry, however, I find Tiffany desirable because of their wide product offering.

Signet Jewelers (SIG) shares trade an average of 686,000 shares per day, and the company has a market cap of $3.9 billion. Signet pays a 48 cent dividend yielding 1%.

Signet is reporting earnings this month, so expect increased volatility in price. Estimates per share are between 90 cents and $1.01.

Blue Nile (NILE) operates as an online retailer of diamonds and fine jewelry. The company has a market cap of $398 million.

Blue Nile reported a record year in 2011 -- $348 million in sales. Blue Nile trades at a 24,000 gold premium with a forward price-to-earnings multiple of 37. Short sellers have jumped on Blue Nile; a massive 29% of the float is sold short. Up to now shorts have called it correctly, with share prices making recent 52-week lows.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs