STOCK MARKETS — Gold stocks slammed by troubled bullion market — Gold sale Down Under gives investors the jitters

While the Toronto Stock Exchange continued to set records over the report period July 2-8, the TSE’s gold and precious minerals sub-group, wounded by the meltdown in the gold market, lurched to an index level not seen since May 1993.

The TSE 300 composite index closed July 8 at 6,580.84, up 143.10 points over the five trading days, setting a record high of 6,615.35 on the way. The golds were the worst performers on the TSE as utilities, manufacturers and retailers led a booming market. Significantly, the blue-Chip TSE 100 and bluer-Chip TSE 35 indices both moved significantly higher, suggesting a move to more conservative investing by the institutions.

The Canadian dollar crept up again over the same five days, adding 24 basis points against the U.S. dollar to reach US72.84 cents at noon on July 9. It gained on most of the European currencies and was fractionally lower against the yen.

The bullion markets cast the longest shadow over the reporting period, as the announcement of a major sale of gold by Australia’s central bank panicked the market. Gold fell US$15.70 between the July 2 and July 9 morning fixes in London, landing at US$315.75 per oz., its lowest point since July 1985.

Silver was also thumped, giving up 37 cents to settle at US$4.28 per oz.

Supply worries in the platinum-group metals were eased as Russian producers resumed deliveries to Asia. This allowed platinum to fall $30, to US$399 per oz., and bring its premium over gold back to more customary levels.

Palladium, at US$172.50 per oz., was $20.50 lower.

The gold and precious minerals sub-group had a disastrous stretch, with the index losing 7.3% of its value to close at 7,698.08 points on July 8. Leading the charge into the jaws of death was Placer Dome, which fell $2.30 to close at $20.10 on a volume of 13 million shares. Barrick Gold fared better, falling 60 cents to $29.45, but the volume of 9.9 million showed that the institutions were dumping their Barrick shares too.

Posting identical $1.20 losses in similarly heavy trading were Kinross Gold, which closed at $4.95, and TVX Gold, which finished at $6.10. The royalty companies were also thrown for a loss, with Franco-Nevada Mining sacked for $7.50, closing at $61.75, and Euro-Nevada Mining blitzed $4.50 to $38.

Smaller gold producers were hit even harder, with Royal Oak Mines off 60 cents to $2.60, William Resources down 81 cents to $1.34, and Goldcorp down $1.45 at $8.50. Off the index, High River Gold fell 50 cents to $2.50, Aurizon Mines 35 cents to $1.40, and Richmont Mines 70 cents to $4.50. Small mine specialist River Gold bucked the trend, adding 5 cents and closing at $3.40.

The base metals were generally lower on the London Metal Exchange, with the big one, copper, falling 5 cents to US$1.09 per lb. Nickel, at US$3.06, and aluminum, at US69 cents, were both 3 cents lower, and zinc fell fractionally.

Lead was up 1 cents to US29 cents per lb.

The metals and minerals index closed at 5,110.89 on July 8, a loss of only 15.65 points from July 2. Inco, with 5.7 million shares changing hands, led the sector in volume, losing 75 cents to finish at $40.50. Inco VBN shares slid $2 to $26.25 as reports surfaced that talks with Labradorian aboriginal groups to settle land claims and local issues had stalled. Swedish miner Boliden made its debut on the TSE with a 55 cents rise to $7.90.

Despite gold’s dismal performance, a few juniors managed to edge ahead.

Crystallex had yet another good week, gaining 30 cents, to finish at $7.30.

The most actively traded junior was Pure Gold Resources, which rose 4 cents to 27 cents. Earlier this month, the company and its partner, Ashton Mining, began testing several magnetic anomalies on the Buffalo Hills project in Alberta. On that property, the partners are also carrying out a property-wide aeromagnetic survey and taking a mini-bulk sample from kimberlite pipe K-14.

Projects are also under way on several properties the partners hold in the Northwest Territories.