Toronto Stock Exchange Volumes light as investors await clearer

Confused investors opted to remain on the sidelines today, March 21, as they waited for more definite signs of what the immediate future holds for the economy. As a result, volumes were generally low and the composite 300 lost 8.76 points before closing at 3735.84. According to Julian Baldry, senior base metals analyst at Toronto-based Nesbitt Thomson Deacon, the recent carnage on the Tokyo market, combined with a stronger U.S. dollar, higher interest rates and commodity prices, has created two schools of thought among investors.

One is that a softening of interest rates will eventually spark the world economy into a growth cycle that will push the price of metal stocks upward.

The second and more pessimistic scenario is that all the industrial economies with the exception of West Germany are slowing down and taking demand for metals along with them. “Our opinion is that we are close to the top of the market and share prices of the metal producers will begin to fall,” said Baldry who admitted his theory is not yet being supported by market activity.

“We didn’t expect to see the rally of the past three weeks which has driven the price of Inco shares, for example, up from $24 to $32,” he said.

Even though the metals index was off 25.55 points, the big metal producers like Inco and Cominco are still trading well ahead of their 52-week lows. Inco was up 12 cents to close at $32.25 while Cominco gave up 50 cents before ending the day at $26.88.

Gold, on the other hand, is closely tied to the U.S. dollar which has been gaining at the expense of the Japanese yen and English pound. That, says Baldry, has tended to “prick gold’s balloon.” While the price of gold held steady at US$392 on the second London fix today after falling US$9 earlier in the week, the gold and silver index gave up 23.62 points before closing at 7292.33.

As if acting in sympathy, gold producers Corona, Echo Bay and Placer Dome all remained steady. However, American Barrick Resources gave up 25 cents before closing at $22.88.

Previously unheard of, Anglo Canadian Mining is suddenly attracting attention after optioning two patented claims located between Falconbridge Gold’ Owl Creek and Hoyle Pond mines near Kidd Creek, Ont. With almost 400,000 shares trading this week, the issue remained steady at 50 cents.

As the claims have been kept in the family of prospector Corrie Miller since the 1930s and Miller has already turned down offers from Falconbridge, the acquisition must be regarded as a coup. However, by issuing six million shares to the vendor and a 3% net smelter royalty to Miller, Anglo Canadian has paid a heavy price for the ground.

Another company that has attracted investor attention recently is Euro-Nevada Mining. With a basket of royalties on the Carlin gold trend in Nevada, Euro-Nevada is hoping that Newmont Gold’s new “Beast deposit” will turn out to be as beautiful as some of the other gold discoveries near Carlin.

Newmont is remaining tight- lipped on this one but rumor has it that the “Beast” (an acronym for Blue Star East zone) may extend on to Euro-Nevada’s Chicago claims.

Euro-Nevada’s share price has risen to $14 in conjunction with exploration activity on a block of claims north of American Barrick’s Goldstrike mine which is also on the Carlin trend. Barrick is still being dogged by a lawsuit it inherited after purchasing the Mercur gold mine in Utah.

In the latest development, a New York court has ruled against Barrick’s attempt to sue Gold Standard for waging an alleged disinformation campaign in relation to the lawsuit. However, the ruling ought to have little affect on the outcome of the trial which is set for April 30, in Tooele, Utah.

In other news, attention on the Eskay Creek gold project north of Stewart, B.C., has driven the price of Stikine Resources shares up to a staggering $54.25. But rumors that Echo Bay Mines is preparing to bid for Stikine have yet to materialize.

Finally, partners Central Crude and affiliate Hemlo Gold expect to produce test milling results from the Eagle River joint venture in northwestern Ontario’s Mishibishu Lake area. Central Crude closed up 10 cents at $4.70 while Hemlo lost 12 cents ending the day at $16.50.