This Day On The Street
Continue to site
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

Gold Miners Still Trying to Dig Out

NEW YORK ( TheStreet) -- Gold futures and shares of gold-mining companies took a sharp turn higher Wednesday after the Federal Reserve surprised the market by announcing a continuation of bond purchases, currently at $85 billion a month.

The Market Vectors Gold Miners ETF (GDX), which tracks shares of gold miners, climbed almost 9%, while the widely followed SPDR Gold ETF (GLD), which is backed by physical gold, gained more than 4.3%, its largest one-day increase since 2012.

Gold's rally may be too little too late for gold miners Newmont Mining (NEM - Get Report), Anglogold Ashanti (AU - Get Report), Barrick Gold (ABX - Get Report) and Goldcorp (GG), which are stuck in a downward trend.

Wednesday's spot gold prices provided miners a reprieve to catch their collective breaths after GDX, the ETF that tracks their stocks, neared the lows of 2008.

The Fed announcement, however, is unlikely to boost the price of the yellow metal high enough to give the miners a sufficient spread between production costs and the price at which they can sell gold on the open market.

One significant headwind facing gold bulls and miners is a one-two punch from India, one of the world's largest consumers of gold.

First, India's currency, the rupee, is trading near its weakest levels against the dollar in more than 10 years. Thursday morning it took 61.93 rupees to buy a greenback.

To put that into context, when gold hit its 2011 highs, it took only about 45 rupees to purchase a buck.

This means that for Indian consumers, gold is still trading near all-time highs.

The second punch comes from the Indian government, with a 50% tax increase for gold jewelry imports this week, as reported by Reuters.

India in part raised the tax as a domestic protection measure, but it also wants to diminish the crippling balance of trade that has sent the rupee crashing.

Imported jewelry is a relatively small percentage of the overall bullion India imports, but the tax increase is part of an overall government pattern of trying to decrease gold imports.

Unlike investors in spot gold, investors in gold-mining stocks are not yet ready to enjoy Wednesday's spike.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GDX $23.41 0.00%
ABX $17.46 0.00%
AU $14.89 0.00%
GLD $122.21 0.00%
NEM $32.35 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs