Toronto Stock Exchange Gold index suffers as investors bail out of

A small measure of calm reigned over the markets today, Aug. 8, as U.S. President George Bush attempted to protect America’s interests in Saudi Arabia by moving 4,500 troops toward the big oil producer. The composite 300 index closed up 5.36 points at 3476.04 as some post-long-weekend profit-taking drove share volumes to over 20.6 million.

However, the ears of many market watchers remained glued to their radios as they waited for news that has driven the price of oil up by 75% in recent weeks to US$28 a barrel and renewed concerns about inflation. The resulting inflationary worries have been good for gold, as indicated by this week’s US$13.65-per-oz. increase in the price of the yellow metal.

Even though gold gave up some ground today after closing at US$384.75 on the second London price fix, precious metals analysts remain bullish in the near term.

A 124.83-point drop in the gold and silver index, they say, was sparked by some long-term investors who have taken the opportunity to bail out of the market.

“The only thing that has prevented gold from rising above US$400 per oz. is some heavy selling over the past week by companies anxious to cash in on the price upswing,” said Michael Jalonen, a gold analyst with Midland Walwyn Capital Inc. in Toronto. He estimates that about one million ounces have been sold into the market during the past 10 days.

News that the African National Congress and the South African government have laid the ground work for negotiations designed to end apartheid is also good news for gold watchers. Any political settlement is expected to lead to higher wages for mining workers and the eventual closure of some of South Africa’s labor-intensive gold mines.

In the gold sector, Hemlo Gold, which traded more than two million shares this week, closed down 50 cents at $13.13. After reporting third- quarter earnings of 1 cents per share, LAC Minerals also took a spanking. It was down 50 cents. Agnico- Eagle Mines gave up 25 cents as minority shareholder Jacques Forget announced that he was selling his 2% stake in the company.

Shares of Vancouver-based Stikine Resources, which gave up $1 today, will be delisted from The Toronto Stock Exchange, Sept. 4, because of inadequate public distribution.

As holder of a 50% interest in the Eskay Creek gold discovery in British Columbia, Stikine has been the subject of a takeover battle involving Placer Dome and Corona. The latter company, down 25 cents today, said it will embark on a joint venture with Repadre Capital to look for diamonds in Botswana.

After a $1.13 gain earlier in the week, the Central Crude issue remained steady at $5.38 today. While Central Crude President Richard Nemis is waiting for a feasibility report on the Eagle River joint venture with Hemlo Gold, some new drill results suggest that tonnage continues to grow in the Mishibishu Lake, Ont., camp.

Meanwhile, a proxy battle for control of the Sherritt Gordon board will occur at a special shareholders’ meeting in Toronto, Sept. 19. The meeting was requisitioned by Canada SherGor Enterprises, a company controlled by two former executives of Horsham. Sherritt was even today, closing at $7.63.

Crown Butte Resources suffered a 25 cents drop in its share price today after revealing that a 75-ft. intersection, averaging 0.36 oz. gold and 0.64% copper per ton, had been pulled from its World property in Montana. With an option to acquire 60% of Crown Butte’s shares, operator Noranda is working around the clock to define and expand geological reserves.

Continental Gold says it has arranged a private placement of 222,300 common shares at $13.50 a share.