COMMENTARY — Of the gold price, Alaskan permafrost

Analyst Ian Lamont, writing in a recent issue of the Yorkton Natural Resources newsletter:

The physical demand for gold bullion is currently extremely strong and, in theory, this should cause the price to rise. The bad news is that the chart of gold bullion indicates the metal is still in a primarily bear market, with an unbroken downtrend and a pattern of declining peaks and troughs. The good news is that the Toronto Stock Exchange (TSE) gold index appears to have formed a huge base, stretching over more than two years, and the Australian and Financial Times gold indexes have staged major rallies following the serious declines in 1992.

In theory (and the empirical evidence supports this), gold shares tend to lead the price of bullion on both the upside and the down, so, “in theory,” the price of the yellow metal should be about to rise.

The TSE gold index is heavily influenced (nearly 60% by weight) by the performance of American Barrick and Placer Dome, both of which have performed extremely well this year. Other senior North American gold shares displaying bullish pictures are Cambior, First Miss Gold, Franco Nevada, Glamis and Royal Oak.

Among junior North American golds, by far the best charts are the “South American plays.” These include Carson Gold, Crystallex, Golden Star, Queenstake and Venezuelan Goldfields. However, other juniors that present bullish pictures are Cornucopia, Hycroft, Rayrock Yellowknife, Sutton and Viceroy.

From Mineral Resources Newsletter, published quarterly by the office of mineral resources, geologic division, U.S. Geological Survey, Denver, Colo.: Frozen soil, known as permafrost, is an extremely important phenomenon in northern regions. It plays a critical role in many disciplines, primarily because of its control over the temperature and flow of water near the Earth’s surface . . .

A map showing the distribution, thickness and general character of permafrost is being prepared at a scale of 1-to-2,500,000. The last permafrost map of Alaska was printed in 1965 . . . The map units will be subdivided primarily on the basis of climate, topography, soil moisture, vegetation and the thermal characteristics of the soils and rock . . .

About 85% of Alaska is within the permafrost region, and permafrost ranges in thickness from more than 630 metres at Prudhoe Bay in northern Alaska to less than one metre in the southernmost part of the permafrost region.