Toronto Stock Exchange Valient recovery staged by battered markets

Fear and hysteria gripped the financial markets of the world this week, forcing an unprecedented collapse which exceeded even the infamous crash of 1929 (see front page story). On Oct. 19, the New York Stock Exchange plunged under a deluge of sell orders which effectively erased all gains made s ince January, 1987. Like a vicious tornado, which indiscriminately razes all in its path, the market crash hit all issues right across the board. On the tse, the index plunged violently by 407.2 pts on Oct 19. Whereas New York staged a brave rally on the 20th to regain 102.27 pts, Toronto failed to stem the assault, giving up another 220.9 pts for a two day total loss of 628.1 pts.

Reacting with remarkable speed, the Federal Reserve Board in Washington, quickly lowered interest rates — which combined with rising inflation fears, are the main culprits behind the panic sell-off.

The move, combined with an influx of bargain hunters, pushed the tse 300 composite up by 283 pts to close at 3,261 pts — still way off the high of 4,112.86 reached last August. Today’s gain represents a recovery of approximately 45% of the previous two days of losses.

Mining issues, which are strongly weighted in gold, were not spared the onslaught, despite an $11 gain by gold to $481 (US) per oz on Oct 19. More than ever, the collapse in gold issues underscored the general market pandamonium which seemed to scream `damn the fundamentals — liquidate.’

At the close today, gold bullion gave up $13 to $468 in New York. However, almost every gold and base metals issue showed some sign of recovery. Gold proxy American Barrick Resources, advanced to $25.25. Just a day before, the issue was hammered down to $19. Volume was a whopping 634,616 shares for a value of $15.2 million. Placer Dome Inc was steady at $19 on volume of more than one million shares for the day. Hemlo Gold posted a small gain to $20.

Lac Minerals, which is still reeling from its loss of the huge Page- Williams gold mine at Hemlo, Ont., to Teck and International Corona, tumbled to $9.50 during the crash. The issue recovered today to $13. Hemlo winner, International Corona Resources, which soared to a high of $85 after defeating Lac’s appeal, closed at $58.50.

Base metals issues also felt the full force of the collapse, recording incredible losses. Inco Ltd, which just last week hit a new high of $30.88, went on a week-long losing streak which culminated with the Oct 19 collapse. The issue, which fell to $18 at one time, made up some ground to $22. Falconbridge Ltd, also a major world nickel producer, was firm at $21. Minnova, which is exposed to copper and future zinc production, closed the day at $22.50.

Middle-tiered golds, such as Canamax Resources and Aur Resources, also fell victim to the new financial reality. Aur was as low a $5 before recovering to $7.75. Canamax moved to $8.63. Franco Nevada, which is seeking almost $200 million for its interest in the Goldstrike gold property in the Carlin area of Nevada, was active at $7. During its hey-day just three weeks ago, Franco found considerable support at $15.

As a footnote, three issues (better still, aberrations) actually advanced, albeit modestly, on what is now becoming known as Black Monday. Terramar Resources added a penny to 61 cents . Iron Bay Trust and Liberian Iron Ore added a penny and 25 cents to 23 cents and $5.50 respectively. We might add that those gains came on miniscule volume of several thousand shares each.