Juniors slump as gold price loses ground

Toronto Venture Exchange-listed companies generally lost ground as gold headed lower during the report period ended July 27. The slump reflects fears of rising interest rates following better-than-expected economic indicators in the U.S. The S&P TSX Venture Exchange index fell by more than 55 points, or nearly 4%, over the period and closed at 1467.59.

The price of gold lost US$13.60 per oz., or 3% of its value, as it headed lower each day in the period, falling to US$387.40 from US$401.80 in New York. The culprit is the strengthening U.S. dollar, which was higher on July 27 against the euro and other currencies, such as the Japanese yen, the Swiss franc and the Canadian dollar. An increase in consumer confidence and an upturn in the jobs outlook resulted in a rally in the greenback, and that gave investors reason to worry the Federal Reserve might raise interest rates sooner than expected.

After reaching a new 3-month high, silver fell more than 6% to US$6.17 per oz. Platinum and palladium, after nearly reaching 2-month highs, fared somewhat better, losing only about 3.5% apiece. Platinum closed at US$807 per oz.; palladium, at US$222 per oz., while copper closed only a few cents lower at US$1.24 per lb.

New 52-week lows outnumbered new 52-week highs by almost 8-to-1 over the trading period. Eighty-five companies sank to new 52-week lows, compared with only 11 that reached new highs.

Topping the volume leaders was Stikine Gold, in which more than 3 million shares changed hands. The stock traded in the 24-to-47 range and closed halfway at 36, up 9.5 or more than 35%. The securities commission insisted the company tone down an enthusiastic press release that outlined potential for an economic base metal deposit comparable to the nearby (now-closed) Sullivan mine. Stikine is targeting a Sullivan-type lead-zinc deposit at depth near Kimberley in southeastern British Columbia.

JNR Resources traded more than 2.1 million shares and closed up 8 to 64. The company is teamed with International Uranium at the Moore Lake project in the Athabasca Basin in Saskatchewan, where drilling has intersected high uranium grades. Uranium is trading at the level of US$18.50 per lb.

With more than 1.6 million shares traded, Stornoway Diamond closed down 15, or 10%, to $1.65. The company, together with three partners, launched a $1.75-million field program on the Churchill West property in Nunavut. In addition to drilling, the partners will carry out till sampling in an effort to find kimberlite indicator minerals down-ice from geophysical targets. Exploration drilling intersected two kimberlites last fall, one of which returned 12 diamonds from a 128.5-kg sample.

Vancouver-based Fjordland Exploration traded 1.3 million shares but was off a few cents to close at 36. Fjordland made headlines earlier this month by reporting a wide interval of gold-copper mineralization at the Woodjam property in central British Columbia.

Shore Gold added 25 to close at $1.40. Earlier this month, the company reported a second set of diamond recoveries, including 12 bigger than one carat, from the Star kimberlite in Saskatchewan.

Value losers included Silver Standard Resources, which closed at $15.79 after shedding $1.09 on only 228,000 shares. The company is highly leveraged to the price of silver.