Flight to gold drives junior market

Summer doldrums appear to be ending for TSX-Venture junior miners. The S&P-TSX Venture Exchange composite index closed at 1524.79, up 17.5 points over the trading period Aug. 25-31. Daily volumes have also seen awakenings, with well over 20 million shares a day changing hands. The market is showing signs of life heading into the Labour Day session, traditionally a more active period on the boards.

Gold had a strong week, closing out the trading period up six and a half bucks at US$409.50 on the New York spot market. Gold futures also rallied, closing at US$412.40 for December delivery. The yellow metal’s strength is attributable to market disappointment in weak U.S. economic data. Consumer confidence was eroded by slower job growth; the flight to bullion is also being fueled by a weakening U.S. greenback and concerns over recent terrorist bombings in Russia and Israel, and by an increase in perceived threats worldwide.

Silver followed gold’s path, closing out the trading period and the month at US$6.75 per oz., up a dime from the previous week. Platinum gained just over 1%, closing at US$866 per oz., with palladium shedding US$5 per oz. to finish at US$212.

Copper gained a couple of pennies to close at US$1.295 per lb., whereas nickel softened over the week, shedding 40 to close at US$5.76 per lb.

Decliners continued to outweigh the gainers on the junior mining board. Thirteen Venture Exchange-listed juniors saw new yearly highs for the trading period, compared with 74 companies setting new 52-week lows.

Fueled by investor excitement and speculation, Stikine Gold led the most actives on the junior mining board, trading just shy of 6 million shares over the session. The issue traded as high as 69, closing at 52. Drilling at its Sullivan Deeps project, in the Kootenay district of southeastern British Columbia, is nearing the anticipated target horizon at about 2,500 metres of depth. Stikine is chasing a speculated, fault-dropped section of possible Sullivan-type lead-zinc mineralization.

The second most active issue, Spider Resources, saw volume of 4.96 million shares; it closed at 14. The company, along with partner KWG Resources, reported the recovery of six macrodiamonds from the latest sampling at its property near Wawa, Ont.

Bronze in the most actives went to prospective diamond miner Shore Gold, which saw a huge investor surge in its stock, trading 4.5 million shares in lead-up and following the release of its fifth and latest set of diamond recoveries from the Star Kimberlite in the Fort la Corne area of central Saskatchewan. The issue gained 21%, or 39, to close at $2.24. Shore also posted one of the top value gains for the week. The latest set of almost 1,600 tonnes of kimberlite yielded 214 carats, with the largest stone weighing in at 6.4 carats. Higher diamond grades continue to be realized from the Early Joli Fou kimberlites.

Fourth on the volume charts, JNR Resources traded 3.4 million shares, gaining more than 13%, or 9, to close at 76. Previously announced high grades of uranium from drilling at Moore Lake continued to attract investors. The Athabasca Basin project, a joint venture with International Uranium, had reported significant intercepts of up to 7% U3O8. Rising uranium spot prices, now US$19.25 per lb., have drawn market attention to the explorers.