US markets, Jan. 20-24

Investors soured on U.S. equities over the holiday-shortened period, as the Dow Jones Industrial Average fell 580 points to 15,879.11, the S&P 500 Index lost 51 points to 1,790.29 and the Nasdaq Composite Index was off 94 points to 4,128.17.

The selling stemmed from fears of slowing economic growth in China and expectations that the U.S. Federal Reserve would scale back its stimulus program.

Despite the drop in the general market, gold was up US$12 per oz. to finish at US$1,264.30 per oz. The surge is connected to a drop in U.S. real interest rates, with investors typically turning to the metal when inflation-adjusted yields drop.

Gold’s improved status filtered through to miners, as the top-five list of market gainers by dollar value was crowded with gold names such as Randgold Resources, Royal Gold, Franco-Nevada and Agnico Eagle Mines. 

The momentum in the metal price meant that not even a looming strike could get in the way of AngloGold Ashanti. The gold miner’s shares were up 58¢ to US$14.10 during the period despite confirmation that the Association of Mineworkers and Construction Union (AMCU) in South Africa intended to call a strike. The threatened strike is connected to wage negotiations that concluded last September, with a separate union representing most of the workers accepting the deal. But AMCU — which represents 17% of the miner’s South African workers — did not accept the deal.

Minco Gold shares were the largest gainers by percentage points, with the company set to start a drill campaign on the Clementine West base-metal sulphide prospect in central Newfoundland.

Shares of Tasman Metals were among the worst performing for the period, dropping 15% to $1.08. Investors were apparently reacting to equity dilution, as the company announced a private placement that priced each new unit at $1.10 — made up of a stock and a warrant with a $1.50 strike price. Equity issuance raised $5 million for company coffers, which Tasman says will be put to work at its Norra Karr rare-metal projects in southern Sweden.

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