STOCK MARKETS — Gold nosedives yet TSE stays afloat

The Toronto Stock Exchange rose fractionally during the trading period Dec.

30-Jan. 7, though gold issues dived as precious metal prices fell drastically. The TSE 300 composite index rose 44.26 points over the period, closing at 5,946.87 on Jan. 7.

The Canadian dollar put on a 2-day show of strength Jan. 6-7 to reach US73.89 cents at noon on Jan. 8. It also made big gains against the major European currencies and the Japanese yen. By Jan. 7, the Bank of Canada was actively selling the Loony to hold the price down, and late December’s talk of higher interest rates had ceased.

The big news in the financial markets was the crash in precious metal prices.

The London gold fix on the morning of Jan. 8 was US$355.80 per oz. — $13.80 lower than on Dec. 30. By afternoon the price had recovered slightly, reaching US$356.60 per oz. By presstime, the mid-market price in New York was back to US$355.95 per oz.

Other precious metals were hurt as gold fell. Silver was off 22 cents on the week, with the Jan. 8 silver fix at US$4.66 per oz. Platinum was $11.25 lower, reaching US$359.00 per oz. as investors tried to preserve the price gap between the metals. Palladium, oddly enough, was $2.50 higher at US$119.50 per oz.

The TSE’s gold and precious minerals sub-group lost big, shedding 782.65 points, a loss of 6.9% of value, to finish the trading period at 10,578.87.

Most actively traded was TVX Gold, which announced it was looking for a buyer for the Casa Berardi mine in northwestern Quebec. Although the mine will operate for at least three months while the company looks for a buyer, it may be shut down. TVX closed down, too, falling $1 to $9.70. Partner Golden Knight Resources, a thinly traded affiliate of Teck, was $1.45 lower at $5.15; Teck’s B-series shares were also lower, losing 75 cents to close at $31.

There was still no word on the fate of the Busang gold project in Kalimantan, Indonesia. Bre-X Minerals, which fell 45 cents to close at $21.25, saw 3.1 million shares cross the floor — a change from the wild trading of previous weeks. Other principals in the drama saw their shares fall in response to gold’s troubles — Barrick Gold fell $2.70 to close at $36.55 and Placer Dome slid $2.45 to close at $27.60.

Gold’s troubles seemed to hit the royalty companies hardest, with Euro-Nevada Mining off $3.70 to close at $37.20 and stablemate Franco-Nevada Mining down $4.30 at $58.45.

Base metals were generally higher over the report period, led by nickel, which added 35 cents per lb. to finish the Jan. 8 ring trading session at US$3.20 per lb. Copper was also healthier, closing at US$1.08 per lb. for a gain of 7 cents. Aluminum gained 1 cents, finally poking its head above the US70 cents-per-lb. level. Zinc, at US48 cents per lb., was marginally higher and lead, at US31 cents per lb., marginally lower.

The base metal stocks responded, with the TSE metals and minerals sub-group gaining 151.62 points to close at 5,378.60. The gain of 2.9% outpaced the broad market. Inco was the most active of the base metal stocks, with 3.3 million shares traded. The “Big Nickel’ rose 65 cents to close at $44.40.

Noranda added 60 cents to finish at $31.15, also on relatively heavy volume.

Cameco was up 60 cents to close at $55.50 and Falconbridge was 30 cents higher at $29.50.

The juniors were mixed in generally thin trading. One exception was Arimetco International, which fell 44 cents to close at 21 cents, with a volume of 2.3 million.