Wall Street tumbles on Brexit, June 20–24

U.S. equities sank after Britain’s surprise decision to leave the European Union. The main U.S. indices all lost more than 3% on June 24, erasing year-to-date gains for the S&P 500 and the Dow Jones Industrial Average, while the Nasdaq widened its 2016 loss. For the week, S&P 500 and Dow finished at 2,037.41 and 17,675.16, respectively, both down 1.6%. The Nasdaq fell 1.9% to 4,707.98. The Philadelphia Gold & Silver Index advanced 3.7% during the week to 93.70, on the back of higher gold prices. Spot gold and silver finished at US$1,315.60 per oz. and US$17.72 per oz., both up 1.4%.

Raymond James analysts have increased their 2017 assumptions for gold and silver by 10% and 20% to US$1,400 per oz. and US$20 per oz., mainly due to the “potential for prolonged uncertainty of the wider Brexit ramifications for the European, U.S. and global economies, and also the diminishing prospects of interest rate increases in the U.S.”

Gold companies were among the top value gainers, despite no major corporate news. Franco-Nevada shares rose US$1.89 to US$72.43 and Agnico Eagle Mines shares climbed US$1.81 to US$52.03. Newmont Mining advanced US$1.54 per share to US$37.19.

On June 20, Kinross Gold halted mining and processing operations at its Tasiast gold mine in Mauritania. The company said it could not fully operate the site, following the Mauritanian Ministry of Labor’s recent decision to bar certain expatriate employees from working, due to allegations of invalid work permits. Kinross has ensured the work permits are in good standing and does not expect this to affect Tasiast’s phase one expansion. Currently, 88% of the employees at Tasiast are Mauritanian nationals. The temporarily suspension comes a week after Kinross reported that the strike by unionized employees at the mine that started on May 24 has ended. On June 22, the major signed a non-binding letter of intent with Yorbeau Resources, for an option to acquire 100% of the junior’s Rouyn property in Quebec. Kinross shares added US13¢ to finish at US$5.11.

Vale has repaid US$1 billion of the US$3 billion drawn under the revolving credit lines in January 2016. It partially used the proceeds from the US$1.25 billion, 5.875% guaranteed notes due 2021, to repay some of its debt. Shares closed at US$3.59, up US3¢.