Golds shine amid market downturn

It has been a while, but gold lived up to its reputation as a safe haven during the Dec. 13-19 report period, as a weakening U.S. dollar prompted gold-buying overseas.

The buying came amid the U.S. Federal Reserve’s Dec. 19 decision to leave interest rates unchanged while adjusting its bias toward a more accommodative policy. The Fed’s decision is based on the belief that a recession, rather than inflation, is now the greatest risk to the U.S. economy.

On the Toronto Stock Exchange, the gold-and-precious-minerals sub-index shot up 3.4% to 4,412.13 points as the broader TSE 300 index plummetted 4.9% to 8,886.17 points.

The gain in golds was led by Canada’s major producers: Barrick Gold rose $1.02 to $25.20; Placer Dome advanced $1.10 to $15.15; and Franco-Nevada Mining jumped 75 to $17.90. Going the other way was: Kinross Gold, off 10 to 87; Cambior, slipping 15 to 39; and TVX Gold, down 5 to $3.05 as it brushed off a request for a special meeting of shareholders.

Rio Narcea Gold Mines sagged 9 to 48 as Barrick Gold confirmed it would not to exercise its right to subscribe for 1.5 million Rio shares at a price of $3.50 per share under last year’s joint-venture agreement. Barrick thus terminates its interest in a joint-venture company established to hold and explore properties in Spain. Rio Narcea now retains a 100% interest in the company.

Prairie gold miner Claude Resources was up 2 to 50 as Placer Dome announced it would proceed with an option agreement on Claude’s Madsen property, near Red Lake, Ont. Placer can earn a 55% interest in the property by spending $8.2 million in the first three years and delivering a positive bankable study over the following two years. A total of 36,000 ft. of drilling is planned for 2001, beginning in January. The major also subscribed for 1 million Claude treasury shares priced at 75 each.

There was a flurry of good news from Canada’s diamond juniors: Dia Met Minerals‘ B shares rose 25 to $22.50 as the company reported rosy 9-month earnings of $37.5 million from its share of the 2 million carats gleaned from the Ekati mine; Aber Diamond rose 75 to $14.10 as the junior and its partner, Rio Tinto, gave an official thumbs-up to the proposed Diavik diamond mine near Ekati; and Twin Mining fell 7 to 48 in advance of announcing some nice numbers from its sampling program at five diamond-bearing kimberlite pipes at Jackson Inlet on Baffin Island.

It was a relatively quiet week in the base metals sector: Inco rose 27 to $24.40; Falconbridge declined 70 to $17.15; Noranda was unchanged at $14.95; Teck‘s B eased down 5 to $12.90; Cominco jumped $1.15 to reach $23.10; Boliden dropped 13 hit a new 52-week low of 88; and Breakwater Resources fell 11 to hit $1.34.

Inmet Mining rose 14 to $1.90 as it received an early payment of $4.7 million arising from the sale, in 1995, of its interest in Montanwerke Brixlegg, an Austrian copper smelter. Inmet will record the amount as earnings in the fourth quarter.