STOCK MARKETS — Volatile gold stocks react to bombing,

An American-led military assault on Iraq did little to boost the Toronto Stock Exchange’s beleaguered gold stocks during the week ended Jan. 19 as gold slipped 20 cents to close at US$329 per oz. in London.

Gold is traditionally considered a “safe haven” investment during periods of instability, but has not been living up to expectations in these politically charged times.

Reacting to bullion’s poor showing, the TSE’s precious metals index plunged 46 points to close at under 5,000.

But that trend reversed itself today, Jan. 20, as United States President Bill Clinton was sworn into office. Clinton’s pledges to stimulate the U.S. economy are viewed as inflationary, and therefore bullish for gold. The index soared by 183 points.

Producers touching new lows during the report period included Echo Bay Mines, down 63 cents to $5.25; Hemlo Gold Mines, down 25 cents to $7; Pegasus Gold, down 37 cents to $16.38; and Lac Minerals, down 63 cents to $5.50. Bucking that trend was Placer Dome, which added 25 cents to $15.13. Speculation surrounding Placer’s Las Cristinas gold property in Venezuela prompted the producer to issue a press release stating that although the project has produced encouraging results, “it is too early to make a reliable estimate of the resource.”

Investors took this as a promising sign, pushing shares of the heavily-promoted juniors with ground in the vicinity to new highs. Trading 2.6 million shares, Queenstake Resources jumped 82 cents to $2.92. Queenstake is exploring the area in partnership with VSE-listed Venezuelan Goldfields and is about to start mining an alluvial prospect next to Las Cristinas.

Working next door in Guyana, Golden Star Resources touched a new high of $8, before slipping back to close the week up 25 cents to $7.75. Meanwhile, the diamond play, also high on every speculator’s wish list, failed to yield similar rewards during the report period. A combination of poor results from the Tenby claims earlier in the month, a sluggish diamond market and a shortage of news from the Northwest Territories softened the diamond stocks almost across the board.

Among the high-profile losing issues were Aber Resources, down 10 cents to $1.90; Dia Met Minerals, down $3.25 to $33.25; and SouthernEra Resources, down 25 cents to $2.95.

Taking the biggest hit was United Reef Petroleums, which lost 77 cents to $2.33 after hosting an information seminar on its diamond concession in Africa for investors in Toronto. Company officials attributed the drop to negative newspaper reports about the meeting.

Responding to aggressive promotion in the United States and an investor penchant for diamonds, United Reef soared to as high as $4.60 earlier this year. A program to prove up reserves is now under way.

Reef has agreed to option off sections of a separate 500-sq.-km property, where ownership is pending, to several Canadian juniors, including Black Hawk Mining. Black Hawk added 12 cents to 47 cents.

Metalore Resources, having wrapped up its appeal of the 1990 decision that awarded the Brookbank gold deposit near Beardmore, Ont., to ASE-listed Ontex Resources, emerged as one of the best performers during the report period. Although nobody knows when the appeal decision will be handed down, the Ontario oil and gas producer added $3.37 to $8.50.

Great Lakes Minerals, trading in the 68-72 cents range, says its 543-S copper deposit in Michigan will enter production in the second half of 1993 at a projected rate of 25 million lb. per year. Ore will be shipped to Metall Mining’s nearby Copper Range facility for processing. Metall closed down 25 cents to $12.62.

Audrey Resources, off a nickel to 63 cents, says development of its 1100 lens at the Mobrun property in Quebec is under way and will be completed by the end of the fourth quarter.

Joutel Resources, gaining 2 cents to 29 cents as the most active trader, says that as a result of an agreement with a private company, it now has exposure to 11,000 sq. km of prospective ground in Cuba. Signing of the “first formal mining exploration agreement” with Cuba is anticipated on March 15, Joutel says.