gold investment, silver investment

Precious metals investment terms A to Z


A rally is a period during which prices in the financial markets go up. Rallies tend to be of shorter duration-- days, weeks or months -- than bull markets, which can last for years. For instance, a rally in gold might be gold's upswing that remains in place for a week or a month, while an upswing that lasts a decade would be called a bull market.

Eric asks:

Eric, Jill and John met at a bar to relax together in the evening. They are talking about what has happened to each of them throughout the day. Suddenly, Jill’s attention shifts to the TV set on the wall.

Prof. Jill, the Investor

Prof. Jill, the Investor

What kind of motorsport is this, there on the TV? It’s not NASCAR is it?
Eric, the Beginner

Eric, the Beginner

No, it’s not NASCAR. NASCAR races take place on closed tracks and this is a race on what looks like a public road. John, any idea what it is?
John, the Trader

John, the Trader

It’s rally racing.
Read the whole discussion


During a rally the price of an asset, group of assets or the prices on the whole market tend to increase. In other words, it is a period during which prices follow an upward trend . A rally is mostly synonymous with a bull market – the difference is that rallies last a shorter time than bull markets. Moreover, rallies may occur both during bull and bear markets . If we see a rally within a bear market, it can sometimes be called a bear rally. This means that the rally is expected to be short-lived after which the price will reverse and the consecutive decline will be bigger than the rally.

Generally, a bull market is a very long-term rally and a rally is a small bull market.

Rally in Gold

From a gold investor’s point of view it is important to be able to identify whether an observed upward movement is just a rally during a bear market (taking a bigger decline as a "bear market") or an end of a bear market and a beginning of a bull market. To explain that, let’s take a look at a chart of SPDR Gold Shares (ticker: GLD, charts courtesy of Yahoo! Finance).

rally in gold

The chart presents the prices of GLD (proxy for gold) between May 2008 and April 2009. It is relatively easy to notice a bear market between July and November 2008 (red line). This bear market was interrupted by a rally in September/October 2008 (green line). However, the rally was short-lived and was followed by further price declines. It did not end the bear market; therefore, it was a bear market rally in gold.

Now, let’s take a look at the same chart, however with a different rally highlighted.

rally in GLD

As you can see a rally in November 2008 was successful in breaking the bear market and reversing the market trend (the new trend is symbolized by the orange line). This rally started a bull market for gold.

For a precious metals investor it is crucial to be able to identify a bear market rally from the start of a bull market, as a bull market implies that the prices are likely to go up in a longer time frame. To tell one from another one usually has to carry out thorough analysis of the market, check set of investment tools and examine charts dedicated to precious metals.

We hope you enjoyed reading the above definition. If you'd like to learn more about gold and in particular about its most recent rallies as well as declines along with their implications, we invite you to sign up for our gold newsletter. It's free and if you don't like it, you can easily unsubscribe. Sign up today.

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