STOCK MARKETS — Golds bounce back on busy TSE — Base metals also strong as broad market slides

The Toronto Stock Exchange fell slightly during three days of heavy trading over the report period Dec. 17-19, as the gold and base metal issues broke with tradition and actually rose in a declining market. The TSE 300 composite index was 32.09 points lower at 6,535.34, but the gold and precious minerals sub-group added 284.48 points to close at 6,030.73. The metals and minerals sub-group was 78.89 points higher at 3,739.36.

Market activity was heavy on all three days — share volume on Dec. 17 hit 208 million, smashing a previous TSE record of 181 million, set on Sept. 24, 1997.

In the current atmosphere of uncertainty, investors continued to flock to the U.S. dollar, leaving the Canadian dollar in the middle of the Western currencies pack.

Only the pound gained against the greenback over the period Dec. 17-22, whereas the yen gave back a large portion of the gains it realized after the Japanese government announced a major economic stimulus program. The Loony was trading at US69.71cents at noon on Dec. 22, 57 basis points lower than on Dec. 17. With treasury bill yields stuck near 4.5%, the Bank of Canada will probably feel little or no economic pressure to increase interest rates unless the trade balance with the U.S. shifts significantly.

The gold price was the main impetus for the TSE gold group’s strong recovery. The London morning fix on Dec. 22 was US$290.45, $4.35 higher than on Dec. 17. Silver’s surge proved durable, with the white metal unchanged at US$6.06, and 3-month futures solidly higher. Platinum gained $4 from its Dec. 17 low to finish the same period at US$354 per oz. Palladium, however, continued to slide, shedding $8 for a fix price of US$182.

Placer Dome was the hottest issue on the gold index, adding $1.40 to close at $17 on a volume of 11.6 million shares. Barrick Gold also traded heavily, with 9.4 million shares across the counter; it was $1.80 higher at $25.45.

Other golds making respectable recoveries included: Kinross Gold, up 20cents at $4.50; TVX Gold, up 25cents at $3.95; and Echo Bay Mines, up 25cents at $3.50.

Among smaller gold producers not included on the index, Aurizon Mines added 5cents to close at 67cents, Richmont Mines was up 25cents at $3, and River Gold Mines tacked on a quarter to close at $3.45.

Another small producer, Montreal-listed Lyon Lake Mines added 14cents to close at 34cents. The company recently poured its first gold at the Beta Vargas heap-leach operation in western Costa Rica.

Strength in the TSE’s metals and minerals group plainly didn’t hinge on the metals markets, which were little changed. London copper held near US79cents and zinc was off 1cents at US49cents in the Dec. 22 rings; nickel was fractionally lower over the same period.

Westmin Resources was again the most active base metal issue on the exchange. Over the five trading days from Dec. 15-19, 12.2 million shares moved, almost as many as had been traded in the previous five days. The price continued to erode, however — Westmin was down 20cents to $5.45, and even traded as low as $5.40, the current offer price from takeover bidder Boliden. Boliden itself was off 35cents at $3.05.

Inco was also lower, falling 25cents to $24.90 in moderate trading, while Rio Algom was off $1.35 at $24.25. International Curator Resources recovered 20cents to close at $1.60, Noranda was 90cents better at $24.95, and Cominco was up 80cents at $20.80.