STOCK MARKETS — Silver rockets to US$7 as gold flounders — Base metal miners rally as nickel continues climb

The Toronto Stock Exchange 300 composite index ended the report period of Jan. 28 to Feb. 3 at 6,773.45, a gain of 51.73 points, or 0.8%, over the week.

After dropping to an all-time low (versus the U.S. dollar) of US68.31cents on Jan. 29, the Canadian dollar recovered 27 basis points over the report period to close at US68.92cents. The loonie also gained ground on the pound, the yen and the deutschmark.

On Feb. 4, gold was off US$3.05 from the previous week for a London morning fix price of US$295.20 per oz. Platinum edged up 50cents to US$387 while palladium jumped US$5 to US$237 per oz. The surprise of the week was silver, which gained a stunning US$1.03 to hit US$7.05 per oz. after Warren Buffet announced he has been taking a run at the silver market since July. Echoing the Hunt brothers’ famous silver hoarding in 1980, Buffet’s company, Berkshire Hathaway, has accumulated nearly 130 million oz. of silver, representing about 20% of the world’s annual supply.

The TSE’s gold and precious metals index lost most of the previous week’s gains, shedding 603.93 points, or 8.6%, to end the period at 6,402.21.

Placer Dome had a particularly bad week, dropping $2.75 to $17.90, while rival Crystallex bolted back to its former highs, jumping $1.70 to $7.40 as Crystallex management held meetings with Venezuela’s mines minister and other officials. No significant announcements were made concerning Las Cristinas over the period.

With the fall in gold, Canada’s other major gold producers all had an off-week: Barrick Gold dropped $2.40 to close at $26.70; Cambior lost $1 to fall to $8.20; Kinross Gold shed 60cents to $5; Teck lost $3.05 to close at $19.20; and TVX Gold dropped 40cents to $4.05. Franco-Nevada Mining fell $3.35 to $30.50, while Euro-Nevada Mining slipped $1.25 to $22.75.

Spot prices for base metals were mixed through the report period: copper dropped 3cents to US76cents per lb.; lead held steady at US$24cents per lb.; zinc continued to struggle, dropping 2cents to US49cents per lb. On a relatively brighter note, nickel continued to recover from its recent mauling, gaining 3cents to close at US$2.40.

While the mining and minerals sub-group had a good week, rising 155.24 points, or 3.9%, to close at 4,113, it was an even better week for the base-metal majors: Inco rose $1.50 to $26.15; Falconbridge continued to climb, gaining 60cents to close at $19.75 following the release of unspectacular fourth quarter earnings; Noranda remained unchanged at $26.30; Rio Algom rose 40cents to $26.65; Cominco was up $1.35 to $24.85; Inmet rose 40cents to $5.35; and Cameco posted a $3.95 gain to close at $46.95; The Potash Corporation of Saskatchewan rose a healthy $10.25 to a one-year high of $127.25; the company is preparing to bid for the 262-million-tonne Bayovar phosphate deposit in Peru on Feb. 16.

In other producer news, Boliden announced it will begin trading on the Toronto and Montreal exchanges using the ticker “BOL”. The company’s installment receipts have traded on the TSE since mid-1997.

Several juniors posted significant gains over the week, including Pegasus Gold. After filing for bankruptcy protection in mid-January, the company saw a flicker of life in its stock, which rose 23cents to 48cents. Pegasus shares now only trade on the Montreal exchange, following a delisting by the American and a trading halt on the Toronto exchange.

Central African Republic diamond miner United Reef recovered 5cents to close at 13cents, though no announcements have been made of late.

The heavily traded shares of Aur Resources staged a bit of a comeback from their long, slow decline, rising 30cents to $3.70.