Vancouver Stock Exchange Low market liquidity

When your broker insists the market is “bottoming out” and the dailies carry stories about brokers having to drive to work in their Volkswagen “bug” instead of a Porsche you just know things are getting bad. Such is the case in Vancouver where trading volume has shrunk considerably in recent weeks in the face of higher interest rates, lower gold prices, and a weaker Canadian dollar.

A weaker currency is actually good for gold producers but higher interest rates are bad for the market. They keep investors (who often leverage their positions with debt) on the sidelines and make the physical purchase of gold less attractive. (Let’s face it, the yellow metal doesn’t draw any interest).

Tuesday’s trading volume was abysmal, approximately 10.6 million shares, so there’s hardly any liquidity in the market. At presstime, the VSE index was off 2.2 points to 1,005.85 with declining issues well ahead of advances. (With the psychological 1,000 mark fast approaching the VSE may have to look for a new formula to calculate the index to boost it up. It’s done this before).

Among the more active issues at press time was Athena Gold which tumbled 9 cents to $1.50 on 101,000 shares. Earlier this year, Athena completed a phase 1 drill program on its Talapoosa gold-silver property in Nevada. An independent engineering study is now trying to determine a mineable reserve.

Bucking the negative trend was International Interlake which climbed 26 cents to $2.71 in moderately active volume. Hemlo Gold has encountered a gold-bearing zone below 7,000 ft at Interlake’s Hemlo property. (It will be interesting to see if there’s going to be any step-out drilling on this one).

Over our report period, Panorama Resources surged ahead 55 cents to $4.25. Robert Friedland’s Galactic Resources recently purchased another 750,000 shares at $4 a piece and it has an option on two million more. Bunker Hill Mining, which plans to bring the old Bunker Hill mine in the Coeur d’Alene mining district (Idaho) back into production, was 35 cents higher at $4.20.

Despite a number of favorable investment reports, Skyline Explorations tumbled $1.50 to $15. The question some are asking is whether surface stockpiles and broken underground muck really grades better than 0.75 oz gold per ton. This is going to tell the story here.