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!

Should The Gold Rally Be Trusted?

Stocks in this article: ABX GG

Chris Lau, Kapitall: A gold rally is on hold as the world looks to Syria, so what should investors think?

The price of gold, along with gold mining stocks, both appear to have bottomed at the beginning of July. A $1,400 per ounce gold price is frequently mentioned as a point for higher prices ahead. With gold closing recently at $1,417.80 per ounce, what should gold investors expect next?

[Read more from Kapitall: Ford and GM are Growing: Will Tesla Have to Sell Cars to Compete?]

Gold demand

Asia and India are sources of true demand for physical gold. Gold prices could remain steady if the oversupply from miners is alleviated. Miners like Barrick Gold (ABX) and Goldcorp (GG) are reducing exploration and mining expenses in response to low gold prices.

Click on the interactive chart to see data over time. Sourced from Zacks Investment Research. 

Gold fundamentals still strong

Higher debt from governments should support the view for higher gold prices. The deficit in the United States is still growing, and could grow even faster if the nation decides to wage an attack on Syria.

The US could raise the debt ceiling again in September, potentially fueling higher appetite for gold. For the week ending August 23, 2013, demand for gold ETFs was 4.7 tons.

Bottom line

Threat of intervention in Syria will dominate the direction of gold prices in the near-term. Investors should expect the current rally in gold to hold, but should be cautious on buying mining stocks. Barrick Gold is addressing its weak balance sheet by selling assets. The company recently sold three mines in Australia for $300 million, but will need to sell more to reduce its massive debt of $14.4 billion. Risks associated with its Pascua-Lama mine will still limit upside. 


1 of 2

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 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

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