Nothing to cheer in U.S. markets, Nov. 21-25

As Venezuelans wildly celebrated the return of the first gold bars from the vaults of Western banks, there was less to cheer about in the U.S. when Americans returned to work after their Thanksgiving holiday. The abbreviated Nov. 21-25 trading week was marred by more bad news from Europe, where Germany failed to find enough bids for a 10-year auction, bond yields edged higher in nearly every country in the Euro zone,  Standard & Poor’s downgraded Belgium’s credit rating, and the euro hit a seven-week low against the dollar. The Dow Jones Industrial Average finished down 4.78% at 11,231.78, while the S&P 500 index fell 4.69% to 1,158.67. The Nasdaq Composite index lost 5.10% to 2,441.51. Even the Philadelphia Gold and Silver index was down, falling 4.32% to 187.58.

Buenaventura, Peru’s largest publicly traded precious metals company topped the list of value gains with an advance of just 14¢ to US$39.52, on no news, while Xtra-Gold Resources climbed 8¢ to US$1.66, also on no news. On Nov. 9 the junior released assays from fifteen diamond drill holes at its Kibi project in Ghana, the highlights of which included 62 metres of 1.57 grams gold per tonne, including 42 metres of 2 grams gold, and 41 metres of 1.62 grams gold including 20 metres of 2.18 grams gold.

Shares of Vale fell US$2.90 to US$21.90 per share. The company completed a US$3 billion share repurchase program on Nov. 25. Its board also approved a US$6 billion expansion of its Moatize coal project in Mozambique, according to a Reuters report. The expansion will raise output from 11 million tonnes a year to 22 million tonnes a year, the news agency reported, citing a senior company official, who also forecast that first production from the expanded mine will begin in the second half of 2014. Dahlman Rose & Co. also reported that Vale released its capex budget for 2012 of US$21.4 billion, down from this year’s US$24 billion. The New York-based investment bank reported the 2012 capex budget allocates US$12.9 billion for project execution, US$6.1 billion for existing projects, and US$2.4 billion for research and development. It said most of the budget is targeted for expanding iron ore and coal production, “which accounts for 55.6% of total capex, while 22% of the capex has been earmarked for base metal projects.”