STOCK MARKETS — Government dumping gold as price creeps

Canadian government gold sales are heading for a record high this year. To the end of September, the Bank of Canada saw fit to dump nearly 2.9 million oz., which is close to the total of three million ounces sold through the whole of last year. In the bank’s vault, there remain 7.1 million oz., according to news reports, which is roughly a third of the 20.1 million oz. held in 1985. At the current rate of sales, the vault will be empty in 24 months. The bank is clearly not a gold bull, which, to some, will be viewed (correctly, we think) as a bullish signal for the bullion market.

Gold, in fact, did rise by about US$5 an oz. and was trading at presstime at about US$372. Most of the gold equities rose — for example, American Barrick (up 75 cents to $34), Euro Nevada ($1.75 to $33.38), Franco Nevada ($1 to $71.50), Placer Dome ($1.88 to $31.63) and Royal Oak (12 cents to $6.38).

Agnico Eagle was down 50 cents to $18.50 for the report week ended Oct. 19. But Agnico investors shouldn’t be alarmed. During the week, the shares hit a 52-week high of $19.12, which is better than 76 times earnings. The company has no debt and, on the liquid asset side, shows $50 million in the bank. A few weeks ago, Douglas Belanger, executive vice-president of Gold Reserve popped into the offices of The Northern Miner to fill us in on his company’s play in Venezuela. The company is drilling a gold prospect to the south of Placer Dome’s Las Cristinas property. At the time of Belanger’s visit, the stock was trading at about $8 per share. Although no assays have come in yet, the stock has practically doubled in price, closing at the end of our report week at $13.63. It gained just a shade over $3 in the past week alone. The market (buy on mystery, sell on history) is likely anticipating assay results (to be released in November) from the 25 to 30 holes being drilled now. Casting a bit of a cloud on the property is the fact that the original vendors have launched a lawsuit against Gold Reserve. But that has not dampened investor enthusiasm.

Just this past week, a few of the honchos from Athabaska Gold were touring Toronto brokerages to raise money. Athabaska, 24% owned by Royal Oak, has cut high gold values at its Damoti Lake property. (TSE-listed Consolidated Ramrod and CDN-listed Gitennes Exploration are involved in the play.) The Damoti Lake play, however, was not the sole topic of conversation. Athabaska is trying to raise money for a bulk sample on its Nicholas Lake gold bet some 90 km. north of Yellowknife. After 71 drill holes, the current probable reserve is nearly 600,000 tonnes grading 12.16 grams per tonne. Athabaska lost 12 cents to $1.59.

Wheaton River was in the news again. The knock against Wheaton after the Golden Bear acquisition from Homestake was that reserves were minimal. It’s still too early to add anything to reserves, but Wheaton’s trenching and drilling have turned up some remarkably wide intersections with decent grades. Wheaton’s shares jumped by $1.50 to close at $3.50.

Several weeks ago, we reported, in this space, rumors of a thick massive sulphide intersection on Beaufield Consolidated’s Mainstreet property. A press release this week confirmed “anomalous copper mineralization in altered felsic volcanics” had been intersected. No assays were given. Partner Aur Resources is currently drilling another hole to intersect the favorable horizon at or below the 250-metre level.

Beaufield was even for the week at 39 cents; Aur was likewise unchanged at $4.40.