U.S. equities fall slightly, Aug. 27-31

Hopes of further injections of liquidity from the U.S. Federal Reserve following a speech Aug. 31 by Chairman Ben Bernanke sent gold prices higher and helped stem losses on U.S. equity markets. Bernanke’s remarks that the central bank is willing to consider more economic stimulus if necessary sent gold futures to their highest level since mid-March. (Gold for December delivery jumped 1.8% or US$30.50 to US$1,687.60 per oz. on the New York Mercantile Exchange’s Comex division.) Meanwhile, the Dow Jones Industrial Average slipped just 0.51% or 67.13 points to finish at 13,090.84, while the S&P 500 index lost 0.32% or 4.55 points ending the week at 1,406.58.

With the New York spot price for gold advancing US$20.90 per oz. to end the trading week at US$1,691.60 per oz., it’s not surprising that the top-three performing stocks were gold mining or royalty companies. Royal Gold advanced US$3.50 to US$88.02, Franco-Nevada gained US$2.30 to US$51.80 and Randgold Resources jumped US$2.26 to US$102.97, all on no news. Other gold mining stocks that climbed on no news included Newmont Mining, up US$1.45 to US$50.68, Agnico-Eagle Mines US$1.13 per share higher at US$48.32 and Barrick Gold, which edged US$0.94 higher to US$38.52. Coeur d’Alene Mines was also up US$0.76 at US$22.99. The company shut down its open-pit Palmarejo mine in northern Mexico after a fatal accident on Aug. 26. Production resumed on Aug. 27 and the company said it did not expect any change to its 2012 silver and gold production guidance.

News that Molycorp had started up its new heavy rare earth concentrate facilities at Mountain Pass, California, lifted the stock 19.7% or US$1.90 to US$11.51 per share. The company also announced that its Combined Heat and Power (CHP) plant will start feeding “low-cost and high-efficiency” electrical power and steam to its facilities on-site. Mark Smith, Molycorp.’s president and chief executive officer, also confirmed that the company was on track to achieve full Phase 1 production rates in the fourth quarter of 2012. Molycorp was the most actively traded stock of the Aug. 27-Aug. 31 trading week.

On the negative side of the ledger, a bleak outlook for iron ore and coal prices continues to punish Cliffs Natural Resources, which was down US$3.05 to US$35.84. On Aug. 31, the company announced a short-term extension of its labor contract with the United Steelworkers because both parties had failed to reach a new agreement. The contract extension covers about 2,400 workers at the company’s Empire and Tilden mines in Michigan and its United Taconite and Hibbing Taconite mines in Minnesota. The extension will keep the mines operating while negotiations continue.