Toronto Stock Exchange Inflation fears and rising rates hammer

A 0.4% rise in the consumer price index in February was lower than the forecast 0.6% but not low enough to assauge investors’ inflation fears. The increase is expected to spark yet another wave of increases in the bank rate as central banks move to dampen inflation.

Gold bullion, which normally reacts to rising inflation, remained unchanged at $393.35(US) on the second London fix. Although bullion is an inflation hedge, rapidly increasing interest rates make fixed- income investments stiff competition for non-incoming generating gold.

The result was a 41-pt decline in the gold and silver index which closed at 6024.43 pts. Metals and minerals also gave up ground, responding not only to the rate concerns, but to bearish news about rising copper inventories on the London Metals Exchange earlier in the week. The metals and minerals index lost 56.98 pts to close at 3267.92 pts.

Few winners were to be found amongst the base and precious metal issues. Hemlo Gold Mines, which made healthy advances during the past two weeks, slipped 25 cents to $14.50. American Barrick Resources was also 25 cents easier, closing at $25.

Agnico-Eagle Mines and Dumagami Mines traded at $12.50 and $12.63 respectively. Talk is of a merger in the near future. Both companies operate gold mines in Quebec.

Wharf Resources was a big trader as 173,662 shares changed hands today. The issue continued advancing, closing at $7.25. Corona Corp. announced that it purchased a 7.5% stake in the company, making it one of the largest shareholders.

The battle for Dickenson Mines took another twist as Corona said it is looking at a possible legal action against Dickenson. Corona has also extended its offer for control of the company and its affiliate Kam-Kotia Mines, but has not increased its bid. Corona’s A shares were steady at $8.88. Kam-Kotia ws firm at $2.90.

Canamax Resources dipped to a new low of $3.55 losing 25 cents today. The stock has been taking a beating after investors heard that the company’s president and creator, John Hansuld, has quit. Talk is that Canamax’s major shareholder, Amax, had considerable say in Hansuld’s leaving. The company has been hurt by technical problems at one of its mine’s and, like everyone else, low gold prices.

The destruction of Newfields Minerals appears complete. The issue fell to a new low of 25 cents . Newfields built a strong following in 1987 on a gold play in Kirkland Lake, Ont. The issue was well over $3 at one time before starting is long fall late last year.

Cominco Ltd. slipped to $26.88 from $27.38 the day before. The company is building the world’s largest zinc mine in Alaska. The Red Dog project is set to start producing concentrate sometime in 1990.

Inco Ltd. was off fractionally to $35.50 on volume of almost 300,000 shares. The company is predicting the current quarter will be its best ever. Falconbridge Inc. was also a popular issue, trading more than 200,000 shares to close at $28. Noranda Inc., which is Falconbridge’s largest shareholder, plans to further increase its stake in the company. Noranda was weaker at $23; off 63 cents today.

Junior explorer Trader Resources is receiving encouraging results from a gold property east of Timmins, Ont. The issue, which is controlled by Elders Resources, an Australian company, was firm at 46 cents .

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