Bullion price giveth, then taketh away

Seasonal malaise and lack of interest in the TSX-Venture junior market once again resulted in a weakening of the index with sagging volumes.

The TSX Venture Exchange index dropped almost 23 points in the abbreviated trading period of Aug. 10-11 to close at 1470.97, approaching a 9-month low.

The price of gold closed out the trading session at US$395.40 per oz. in New York, off almost US$4.50 from where it began the period.

The anticipated and delivered quarter-point interest-rate hike by the U.S Federal Reserve outweighed concerns over the weakening U.S. dollar, hampering the price of bullion. The rise in the overnight lending rate, to 1.5%, represents the second increase since June 30, following Federal Reserve Chairman Alan Greenspan’s call for “measured” increases.

Record energy costs are expected to continue softening the U.S. economy and the dollar, giving gold-bugs some optimism in the near term.

Silver mirrored gold’s slide, off 21 to close US$6.50 per oz. Platinum remained relatively stable over the shortened period, closing at US$839, up one dollar an ounce. Palladium shed US$3 per oz. to finish at US$211.

Copper showed a slight gain over the period, up a couple of pennies to close at US$1.30 per lb. Nickel essentially remained level over the period, closing at US$6.12 per lb.

As expected, junior mining decliners continued to outnumbering gainers. Just 10 Venture Exchange-listed juniors saw new yearly highs for the trading period, compared with 47 companies setting new 52-week lows.

Western Prospector Group led the most actives on the junior mining board, trading 659,000 shares in the 2-day session. The stock, also one of the percentage leaders, gained more than 21%, or 7.5, to close at 43. The company saw renewed investor speculation on drilling at its Indian River Gold project in the Klondike goldfields of the Yukon. Joint-venture partner Boulder Mining launched an extensive drill program on the gold-bearing paleo-channels and will be testing the underlying quartz pebble conglomerate for gold mineralization as well.

Stikine Gold continued to capture market interest in its hunt for possible deep lead-zinc mineralization near the past-producing Sullivan mine in the Kootenay region of southeastern British Columbia. The issue traded 557,000 shares over the 2-day period, closing at 39 per share. The company is nearing the speculated target depth of the hypothesized Sullivan-type mineralization.

Uruguay Mineral Exploration led all value-gainers over the period, rising 20 to $5.50 on a volume of more than 70,000 shares. Both infill and stepout drilling at the Arenal deposit in Uruguay delivered strong gold grades over significant widths. The company is advancing the project toward open-pit production.

Arctic explorer Stornoway Diamond gained 18 to close at an even $2 per share with volume exceeding 340,000 shares. The issue has risen steadily from the $1.60 level since the beginning of August. The company has been exploring its diamond projects in Nunavut and the Northwest Territories.

The slip in silver helped Silver Standard Resources lead the list of value decliners. The issue was off 70 and closed at $16.29.