Toronto Stock Exchange, Aug. 6-9

The holiday-shortened trading period wasn’t a typical one for the S&P/TSX Composite Index. While often the index will trend in line with the resource sector that makes up a large part of it, for this period the two moved in opposite directions. Fortunately for resource investors things broke positively their way.

The index, however, was down 19 points to 12,542.13 after signals from the Canadian economy were mixed, as the private sector added jobs last month but the overall unemployment rate rose. Investors were jittery over just how the U.S. Federal Reserve will manage an end to its quantitative easing program, as some speculated that Fed’s bond buying program could be cut back as soon as next month. 

Gold decoupled from fears of an end to loose monetary policy for a change, as the spot price for the metal was up US$37 to US$1,312.20 per oz., and the  S&P/TSX Global Gold Index rose 8 points to 180.87. Silver partook in the mini-rally as its price moved above its 50-day moving average and reached a 7-week high finishing at US$21.37 per oz. 

Royalty companies were the main beneficiaries of the positive momentum in precious metal prices as Royal Gold, Franco-Nevada and Silver Wheaton all made gains. 

Allied Nevada Gold couldn’t emulate their success as it was the period’s biggest loser by percentage. Allied shares fell 37% to $3.84 after it said construction would be delayed at its flagship Hycroft mine in Nevada. That news was coupled with less than impressive earnings that showed profits falling by nearly US$2 million. The company said it was now putting off plans to build a processing facility at Hycroft until it finishes a new feasibility study on the project, but gave no timeline on when that might be finished. Allied has already spent or committed to spend $723.5 million of the original estimated $1.2 billion capex.

The strength in the precious metal sector overall extended to the diversified mining camp as the Capped Metals & Mining Index was up 53 points to 773.76 and the price for copper rose by 14¢ to US$3.31 per lb. Teck Resources and First Quantum Minerals led the way as Teck shares gained $2.59 to finish at $27.33 and First Quantum shares were up $1.40 to finish at $17.93. 

And a week after being hit hard by word that Russia’s Uralkali was leaving the BPC potash cartel and would sell potash for cheap in an effort to capture more market share in Asia , potash companies rebounded slightly as Potash Corp. of Saskatchewan, the period’s most actively traded stock, was up 81¢ to $30.85. Verde Potash also jumped back to gain 28% and finish up at 60¢. PotashCorp stock had been trading for $38.90 and Verde Potash shares were trading in the 70¢ range before potash stocks were walloped by the surprise Uralkali news. 

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