STOCK MARKETS – TSE — Gold slides back to low US$280s as majors take a beating — Base-metal markets remain weak while Asian economies flounder

During the report period of Dec. 24 to Jan. 6, the Toronto Stock Exchange’s TSE 300 composite index rose to 6656.26, a gain of 116.76 points, or 1.8%.

Like most western currencies, the Canadian dollar struggled against the global rush to the American dollar in response to East Asia’s economic turmoil. The Loony was worth just US69.88cents on Jan. 6, a rise of 40 basis points since Dec. 24. The Canadian dollar also gained ground against the major European currencies and the yen.

Gold’s modest recovery in the last days of 1997 to prices above US$290 was quickly extinguished in the new year. On Jan. 7, the spot price was down a whopping US$11.80 over the week for a London morning fix of US$282.10 per oz. Over the same period, silver continued to be strong, gaining a penny to reach US$6.10 per oz. Platinum prices sunk US$6.00 to a desultory US$358 per oz. while palladium rose US$7 to US$202 per oz.

In lock-step with the slumping gold price, the TSE’s gold and precious metals sub-group index plummeted 616.49 points, or 9.5%, from its value Dec.

24 to reach 5864.07 points on Jan. 6.

Canada’s major gold producers all had a rough week: Barrick Gold fell $3.10 to close at $24.20; Placer Dome dropped $1.80 to $16.45; TVX Gold slumped 45cents to close at $4.20; Teck slipped $1.15 to $20.85; Cambior fell $1.10 to $7.55; and Kinross Gold shed 25cents to $4.50. Franco-Nevada Mining dropped $2.30 to $25.80, while sister company Euro-Nevada Mining fell $2.10 to $17.

The new year began in a grim fashion for the base-metals markets. Prices continue to be depressed, in part from the spectre of lowered demand in 1998 from the troubled Asian economies: copper spot prices dropped 2cents to close at just US75cents per lb.; nickel fell 7cents to US$2.58 per lb.; lead rose 1cents to US25cents per lb.; and zinc slipped a penny to US48cents per lb.

Between Dec. 24 to Jan. 6, the TSE mining and minerals sub-group rose 53.34 points, or 1.4%, to close at 3788.58. However, between Dec. 31 and Jan. 6, most of Canada’s base-metal producers lost ground: Falconbridge fell 50cents to close at $17.90; Noranda was down $1.10 to $24.40; Rio Algom lost $1.35 to $23.10; Inmet dropped a nickel to $5.40; while Cameco fell $2.60 to $43.50.

Bucking the trend were Inco, which remained unchanged at $24.75 and appears to have bottomed out, and Cominco, which rose 60cents to close at $21.60.

Activity was lively in the junior markets during the report period, with several companies showing positive gains. Pure Gold Minerals, which saw 1.6 million of its shares pass hands, rose 4cents to $1.24. The company recently completed an airborne magnetic survey over its 75%-owned Lethbridge diamond property in southeastern Alberta and will follow this with ground work once the data has been analyzed. Vancouver-listed Reclamation Management owns the remaining 25% interest of the property. A third company, CaribGold Resources, can also earn a 40% interest in the project by way of cash payments, exploration expenditures and share issues.

Montreal-listed Tom Exploration, which holds the Dasserat gold prospect in northwestern Quebec with sister company Loubel Exploration, climbed 15cents to 45cents while Loubel dropped a penny to close at 13cents.

The worst-performing junior over the report period was America Mineral Fields. On New Year’s Eve, the Hope, Arkansas-based firm confirmed that its tender for its Kolwezi copper-cobalt tailings project in the Democratic Republic of Congo had been cancelled by that country’s mining agency. The stock dropped $2.20 over the week to a 52-week low of $1.20.