Vancouver Stock Exchange Market survives plummeting gold price

Gold’s plunge on March 26 from the US$490 level to the $US366 level emphasizes its potential volatility, the lack of solid trading statistics and, if we are to believe the some of the rumors, the relative poor liquidity in the market. The lack of accurate statistics on gold trading was evident in the number of conflicting rumors that were spawned in an attempt to explain the price drop.

The consensus seems to have a foreign country, ranging from any of a number of Middle Eastern states to the Soviet Union, selling anywhere from one million to more than four million ounces of gold.

Observers have difficulty in explaining why a sophisticated investor would dump a large volume of gold on the market in such a way that their own market was hurt. Perhaps the other shoe is yet to drop.

For the week ended March 27, the Vancouver Composite index fared gold’s plunge much better than The Toronto Stock Exchange Gold and Silver index which plunged 6.7%, compared with a relatively mild 1.5% drop in Vancouver.

At 11 a.m., March 28, the Vancouver index was up 3.2 points at 756.66 on about 11.5 million shares, compared with the previous week’s close of 762.17.

The Vancouver market’s performance in light of gold’s drop and the fact that March 31 is broker- year-end is impressive.

Investors seem to be watching the Stikine Arch region, north of Stewart, B.C., with expectations of further finds this summer like that of the spectacular Eskay Creek property owned by Calpine Resources and Stikine Resources.

Calpine regained most of its losses, trading at $6 5/8 after reaching a low of $6 on March 26. Stikine marched back up to $51 after reaching a low of $46 and Prime Resources Group, the majority holder of Calpine, recovered to $5.50 from a low of $4.90 per share.

Other stocks in the Stikine Arch area also fared well.

Kestrel Resources, Kenrich Mining, Teuton Resources and Goldbelt Mines were among many others with property in the area that saw little affect from gold’s drop.

Akiko Lori Gold Resources took a fall, dropping $1.50 to $5 per share. The company is exploring the Springpole project, 70 miles east of Red Lake, Ont., with Noranda. Noranda recently released a geological reserve of 7.9 million tons grading 0.07 oz. gold per ton for the property.

Sheba Copper Mines was active, trading over 630,000 shares and reaching a high of 32 cents before closing at 23 cents for a gain of 13 cents. The company is exploring a property 14 km south of Kamloops, B.C., with McConnel Peel Resources. The companies recently reported that they had taken a 99-lb. bulk sample from the property and float concentrated it to a 17.94-to-1 weight ratio. The concentrate was then assayed at 1.33 oz. gold and 5.25 oz. silver. The companies calculate that bulk sample, therefore, assays at 0.07 oz. gold and 0.29 oz. silver.