Toronto Stock Exchange Large swings in golds, underlie market

The triple whammy of crashing oil prices, a crumbling U.S. dollar and profit-taking by gold bullion investors, took their toll on the Toronto Stock Exchange this week. More than ever, the rapid collapse of gold prices from a 4-year high of $502.75(US) per oz to $485 in one day, clearly underlines the fragility of the post-October 19 markets.

Following two consecutive gains during our review week which added more than 110 pts to the composite index, the gold and oil sell-off triggered the downturn, knocking 26 pts off the tse index yesterday. Today, the tse composite was up marginally by 1.25-pts to 3,145.71 pts. In general however, the composite index has been re- markably steady in the 3,000-pt range following Black Monday, des- pite being ravaged by several sharp 70-pt daily swings.

All eyes were on gold this week, as the precious metal made a valiant attack on the $500 level — considered a key pyschological barrier which must be breached in order for another breakout to the $520- $550 range. The assault was quickly beaten back by a wave of profit taking. Sellers of bullion and gold equities were also responding to the deflationary signals coming from plummeting oil prices. Spot prices for benchmark West Texas intermediate crude fell to $16.63 a barrel — off $1.68 over a 2-day period.

Despite the deflationary effect of lower oil prices, most analysts are still calling for stronger gold prices by the early New Year. Investors seemed to agree today, adding 28.95 pts to the tse gold and silver index. Metals and minerals were also stronger, adding 31.08 pts. Placer Dome Inc. was up 13 cents to $20. American Barrick Resources, was moderately easier at $28.38. Lac Minerals, which was expecting to find out last week if it can appeal its Hemlo case before the Supreme Court of Canada, was unchanged at $13.13.

Getty Resources and partner Davidson Tisdale Mines have an- nounced a production decision for their Tisdale property near Timmins, Ont. Unfortunately, reserves have been markedly cut to only 55,000 tons — sufficient to produce about 12,000 oz of gold next year. Getty was unchanged at $7.50. Davidson Tisdale traded quietly at $1.25. In fact, the Davidson share price appears to have been discounting the numerous problems at the project for the past several months.

Total Erickson, which has bought 11.5% interest in Getty, was up a dime to $3.75. The French company is obviously eyeing Getty’s 49% stake in the huge Tundra gold deposit in the N.W.T. Probably Canada’s largest undeveloped gold resource, the Tundra deposit could see production in the early 1990s.

On the base metals front, Falcon- bridge Inc. posted a nice gain to $23.25. Remember those Falconbridge rights we mentioned two weeks ago?. We noted their highly leveraged upside potential. Today they closed at $3.55 — up 86% from the $1.90 mentioned here.

Inco Ltd. was also better, responding to surging nickel prices which broke through the $3(US) mark. Some observers speculate that nickel could make a run on the $4 mark in the near future. Inco was steady at $26.13.

Conwest Exploration has moved to shore up control of Mineral Resources International; and for obvious reasons. mri was a juicy takeover target with working capital in excess of $60 million and taking in good income from its Nanisivik zinc mine in the Arctic. To top it off, mri also holds healthy oil and gas reserves. Conwest, which is known for making very astute investment moves, is increasing its stake to 50.1%. mri was steady at $2.90.

On the exploration scene, talk is that Beaufield Resources has its teeth into an exciting-looking gold discovery in Quebec. Operated by Falconbridge Inc., the project is yielding strong results from several widely spaced drill holes on the Macho-Rouleau properties. Beaufield was quiet at $1.85.