U.S. markets, Sept. 30-Oct.4

The partial shutdown of the U.S. government did not affect markets the way many prognosticators had predicted. The period saw Democrats and Republicans fail to reach a budget deal, but the Dow Jones Industrial Average was only down 177 points to 15,072 points, while the S&P 500 Index was up 8 points to 1,690 points, and the Nasdaq was up 70 points to 3,807 points.

The government shutdown had a bearish impact on gold, as the yellow metal fell below US$1,300 per oz. The move was attributed to a political impasse where investors lost faith in the U.S. political system, and sold U.S. bonds. As a result, bond prices sunk and real yields moved higher. Gold prices often move inverse to real yields.  

Some miners outside of the gold sector, however, performed well over the period. In particular, U.S. Silica Holdings continued its run, as Wall Street analysts upgraded their price targets for the company that mines and produces industrial-grade silica. The company’s shares were up 13% to $28.31 for the period — a far cry from the US$16 they traded at early in the year. Analysts at BB&T Corp., Morgan Stanley, Sidoti & Co. and Howard Weil all either initiated coverage or upgraded their ratings of the company’s equity. U.S. Silica supplies silica sand for the oil and gas, wind, solar and geothermal energy industries, as well for paint and electronics. Its most recent financial statements showed earnings of 38¢ per share from US$129.8 million in revenue for the quarter.

Platinum Group Metals also enjoyed a strong period thanks to securing prospecting rights from the South African government. The company’s shares jumped 19% to US$1.24 for the period. With the permits, the company can begin exploring the Waterberg extension. The area lies adjacent and north of its recently discovered Waterberg platinum and palladium deposit, which has 167 million tonnes of inferred ore grading 3.26 grams platinum group metals. Seven drills have been mobilized to test the possible extension zone.

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