Toronto Stock Exchange Volatility and fear take hold of markets

The sell-off, which was sparked by mounting uncertainty about the health of the economy, only had a moderate impact on gold prices. The second London fix was $368.50, up about $7 from last week. Historically, golds have registered a stronger reaction during times of financial crisis or uncertainty. This time, however, investors are staying cautious of all commodities, including gold.

Despite the almost lacklustre performance of bullion, gold issues managed to display some strength. Growing “doom and gloom scenarios” combined with a sense that gold has reached a price bottom around $360, suggests that gold’s future could be a lot brighter.

This week’s wild swings naturally provided a few fleeting buying opportunities for aggressive traders. Aur Resources is one of the best examples. After closing at $12.25, the issue lost $2 on Friday. Monday’s trading took it lower to $9.50 before buyers began snapping the issue up. At presstime Aur closed at $12 after trading up to $12.13 on volume of 300,000 shares. Astute market timers racked up 26% returns in a couple of days.

Senior gold issues generated some demand. LAC Minerals is getting street approval for its $378- million deal to buy 65% of Bond International Gold. LAC advanced smartly to $11.75. Both Corona Corp. and Placer Dome Inc. feel that LAC paid too much, officials of both companies told The Northern Miner.

More than 1.1 million Corona A shares were traded today to leave the stock unchanged at $8.13. Ned Goodman, the company’s founder and chairman told a group of analysts in New York that the company’s 50%-owned Williams mine at Hemlo could double reserves.

Placer Dome was also actively traded to close at $18.25. Although a special dividend is not in the plans, the company will consider one in the future if Placer fails to use its large cash hoard to complete an acquisition, Tony Petrina, the company’s boss, told The Northern Miner in New York.

Other stocks which took severe hits included Inco Ltd. The issue collapsed to $35.50 during the crash before recovering to $37.50 today on volume of 300,000 shares. Many players added a takeover premium to Inco’s shares and the shares of other takeover candidates. This premium evaporated after bankers balked at funding the takeover of UAL Corp. in the U.S. — the straw which broke the market’s back last Friday.

Despite the modest $7 gain in gold bullion, several junior to mid- sized gold issues felt the brunt of the retail investors fury. Galactic Resources hit a new low of $2.75 before recovering to $3.10. Pioneer Metals managed to stay above its low, trading down to 50 cents . News that Bob Willis, the company’s founder, is leaving Pioneer, was met with enthusiasm by the street which immediately bid the issue up to 80 cents before settling back to 73 cents . Pioneer is one of the handful of so-called “emerging producers” which evolved into a nightmare after several mining ventures failed or ran into trouble. A new team hopes to turn the company around.

Copper miners Metall Mining and Gibraltar Mines both held their ground after taking losses earlier in the week. Metall was firm at $12.88 whereas Gibraltar managed to advance to $10.88. Both continue to enjoy the benefits of high copper prices. Milt Ward, chairman of Freeport-McMoran, a U.S. gold and copper producer, feels copper prices could surprise everyone next year by remaining well over a dollar per lb. That’s good news for miners like Metall and Gibraltar. Other juniors trading at new lows included Golden Myra at 15 cents before recovering to 21 cents and Queenston Gold Mines which tra ded down to 80 cents before managing to get back to 90 cents . Muscocho Explorations was stuck at a new low of $2.15. The company’s Magino mine near Wawa, Ont., is a money loser at current gold prices.

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