U.S. equities drift lower, Dec. 29-Jan. 2

The Dow Jones Industrial Average and the S&P 500 Index climbed 1.4% and 0.9%, but the major indexes edged lower in the last trading week of the year, falling 1.2% and 1.5% in the following trading session. The Dow finished the week at 17,832.99, while the S&P 500 closed at 2,058.20. By contrast, the gold spot price advanced 3.4% to US$1,223 per oz. and the Philadelphia Gold & Silver Index rose 3.1% to 70.51.

The marginally higher gold price over the holiday period, along with the commitment from the U.S. Federal Reserve to be “patient” about hiking interest rates, helped lift the shares of Randgold Resources, Agnico Eagle Mines and Goldcorp, as well as streaming companies Royal Gold and Silver Wheaton. Randgold recorded the biggest gain in value, jumping US$3.40 per share to US$68.96, while Agnico Eagle climbed US$3.17 to US$27 and Goldcorp advanced US$1.05 to US$18.83, all on no news. Royal Gold climbed US$1.82 to US$64.31 and Silver Wheaton gained US$1.03 to US$20.84, also on no news.

Cliffs Natural Resources gained US41¢ to US$7.03 per share. On Jan. 2 Cliffs announced that it had sold its Logan County Coal assets in Virginia to Coronado Coal II LLC for US$174 million in cash. The tax benefit will be between 20% and 25% of the previously disclosed pre-tax loss of US$400 million, which Cliffs says will be another benefit of US$80 million to US$100 million in cash tax savings. Cliffs confirmed that production at Bloom Lake has stopped.

Cliffs’ CEO Lourenco Goncalves said selling Logan County Coal and the “meaningful” tax benefit to the company “clearly demonstrates our ability to execute complex transactions, despite an adverse M&A environment.” Goncalves also noted that as Cliffs leaves eastern Canada, management has “brought to an end the flawed expansion that has cost Cliffs and its shareholders billions of dollars.” Goncalves added that as Cliffs “becomes a nimble company sharply focused on being the major supplier of iron ore to the American steel industry,” it has no U.S. iron ore contracts resetting in 2015 or 2016, and no part of public debt maturing until 2018.

Weak coal prices beat up most other producers, however, including Alpha Natural Resources, which fell 4.7% to US$1.61.