Gold majors advance amid general gloom

Bringing comfort to gold bugs everywhere, shares in gold producers lived up to their reputation as a safe-haven investment during the Sept. 26-Oct. 2 report period.

In the three weeks of market turmoil that followed the terrorist attacks in the U.S., gold prices have risen more than US$20 to trade in and around the US$290-per-oz. mark.

On the Toronto Stock Exchange, with the 300 index remaining stuck well below the 7,000 points, the gold and precious minerals sub-index soared 5.2% over the period to 5,442.40 points.

Among the majors, Barrick Gold shot up $2.37 to $28.14, Placer Dome gained 50 to $20.40, Cambior traded up 3 to 85, Kinross Gold sold off 3 to reach $1.50 and TVX Gold declined a penny to 65.

Gold stocks trading in the U.S. enjoyed an even stronger week: Newmont Mining jumped US$2.61 to US$24.55; AngloGold rose US$1.12 to US$16.63; Gold Fields was up US46 to US$4.64; Homestake Mining soared US94 to US$9.47; and Ashanti Goldfields popped up US20 to US$3.35.

Rising $1.35 to $22.50, Franco-Nevada Mining made some waves by making it widely known it wasn’t entirely pleased with AngloGold’s takeover offer for Australia’s Normandy Mining, in which Franco holds a 20% interest. However, Franco can’t be too upset: if the company accepts AngloGold’s current offer, it will have made a tidy US$100-million profit in just one year of involvement with Normandy.

Of note, during the Denver Gold Show, the world’s gold majors unveiled a sketchy plan to market the yellow metal as a luxury good, thereby boosting gold-jewelry consumption by at least 340 tonnes, or 7%. These marketing costs could eventually cost US$200 million per year, but the majors think it will pay off with a US$30-per-oz. increase in the price of gold.

The most closely watched mid-tier producers were mixed after two months of strong gains, with Goldcorp rising 76 to $18.48, Agnico-Eagle Mines falling 24 to $15.96, Iamgold advancing 32 to $3.50 and Meridian Gold remaining unchanged at $17.20.

Rocketing 41 to $1.46 over the week, Golden Star Resources proudly unveiled a 2.2-million-oz. gold resource at its 90%-owned Bogoso-Prestea property in Ghana. Resources now stand at 20.7 million tonnes grading 3.31 grams per tonne, with more than half the gold associated with refractory sulphides.

The base metals scene continued its slow slide into depression, despite another round of interest-rate cuts by the Federal Reserve Board in the U.S. Prices for nickel, copper, lead and zinc all languished near multi-year lows, reflecting the grim reality that corporate and consumer spending in North America has fallen off a cliff (with the notable exception of gas-mask sales).

In Toronto, the metals and minerals sub-index remained almost unchanged at 3,452.63 points, with the majors turning in a mixed week: Noranda was off 23 to $14.75; Boliden was up 2 to 26; Inco rose 20 to $19.75; Falconbridge retreated 95 to $14.05; Sherritt International jumped 9 to $3.89; and Breakwater Resources was off 5 to 20.

Teck Cominco‘s B shares rose 41 to $11 as the company warned that its upcoming third-quarter results will include reductions of $154 million ($108 million on an after-tax basis) to the carrying values of non-operating properties. There will also be a $15-million provision for asset sales and reorganization costs. The affected properties include San Nicolas in Mexico, Lobo Marte in Chile, Petaquilla in Panama, Cerateppe in Turkey, Schaft Creek in British Columbia, and Kudz Ze Kayah in the Yukon.

Trading south of the border was volatile: Phelps Dodge dropped US$2.20 to US$27; Freeport-McMoRan Copper & Gold‘s B shares were off 8 to US$10.62; BHP Billiton jumped US59 to US$8.65; Rio Tinto rose US$3.93 to US$62.13; Anglo American was up US69 to US$11.87; and Southern Peru Copper dropped US50 to US$9.40.