Toronto Stock Exchange Fears over rally’s longevity underlie sell-

A bout of nervousness has crept into the markets once again, putting a lid on a rally which has moved the TSE composite index up 400 pts over the past several months. Today, fears of another major downturn prompted a selloff which knocked 29.5 pts off the index to 3,343.97 pts. Golds were also easier, despite the fact that gold bullion remained steady at $457.40 on the second London fix. The gold index gave up 59 pts to 6,676.66 pts.

Bullion was a winner this week following the escalation of hostilities between the United States and Iran in the Persian Gulf. The flareup, which most observers feel could just be the start of an even larger confrontation, heightened tensions in the Gulf.

More comparisons came out this week, following the 6-month anniversary of Black Monday, between the Oct 19 crash last year and the 1929 crash. Most looked at the current upswing and compared it to a similar trend which followed the 1929 crash. Then, the rally was short-lived and was followed by a test of new lows. As long as concerns over U.S. debt, Third World debt and the lack of government resolve to find solutions to these problems remain, then another crash on the scale of Black Monday remains a possibility.

American Barrick Resources was a winner today, adding a few cents to $26.25. Echo Bay Mines was off 75 cents to $25.38. The company, which has made several astute acquisitions in the U.S., is venturing into eastern Canada via a $50-million investment in the Muscocho group of companies. Muscocho Exploration and affiliate Flanagan McAdam Resources are bringing two gold mines into production next year. The cash will help them fund the capital costs of both mines. The Echo Bay minority position is also defensive, making both Flanagan and Muscocho more difficult to take over.

Muscocho reacted favorably to the news, adding 25 cents to $3.70. Flanagan was also responsive, climbing to $3.65, both on good volume.

Pioneer Metals gave up 37 cents to $9.13. The company has backed away from an offer to purchase Canacord’s interest in the Premier gold development in B.C. Pioneer officials failed to return calls from our Vancouver office.

Talk is that another offer for the stake could come from Prime Capital, the Murray Pezim financial company. John Ivany, Prime’s president, is also a director of Canacord.

Audrey Resources got a helping hand from Northgate Exploration. The latter company is taking down a 20% equity stake in the junior Quebec operator. Audrey will use the funds to help fund a $17-million mill development at its polymetallic mine. Audrey advanced 20 cents to $3.25.

Other weaker issues included Canamax Resources which slipped 50 cents to $7.25. Sherritt Grodon Mines, control of which was sold by parent Newmont Mines to a Toronto broker, remained unchanged at $7.50. The share position will be resold to institutions.

Cheni Gold advanced smartly to $5.88. The company, which is developing its Lawyers gold deposit in B.C., is expected to release an increased reserve figure.

Base metal miners Inco Ltd. and Falconbridge Ltd. were both active this week. Inco posted a record $125.9 million(US) first quarter profit and soared to a new high before slipping back to $35 on profit taking. The company is poised to break through the $40 mark this quarter, which should exceed the first quarter financial performance (see front page story). A strike is also looming for Inco at Sudbury, but any strike is expected to be short-lived as workers are now enjoying a bonus plan pegged to the price of nickel.

Falconbridge was also active, trading down 50 cents to $23.25. Mining at the company’s Dominican Republic operation has ceased, pending the resolution of a fight with the government over export taxes. The stoppage, not surprisingly, hurt Falconbridge shares.