New year not so happy for precious metals

Althouth the first few trading days of 2005 saw a slump in precious metals prices, juniors on the TSX Venture Exchange enjoyed a year-end rally.

The S&P-TSX Venture Composite Index closed at 1787.62 for the week Dec. 29-Jan. 4, up just slightly from the previous report period’s close of 1781.44 but off from the high of 1825.48 seen over the period. Average daily volumes were low at 28.2 million shares over the abbreviated trading session but not unexpected for the holiday period.

A U.S.-dollar rally, coupled with fund selling, is partly responsible for the sliding gold price. Bullion closed at a 2-month low of US$428.00 per oz., with an inter-day low of US$424 per oz. on the New York Spot Market, down US$14.50, or almost 3.3%, from the previous week’s close. The devastating tsunami that hit South Asia has cast a pall over the markets in general and is expected to reduce demand and possibly increase supply of the metal through selling.

Silver also gave back some ground, closing out the session at US$6.41 an ounce on the New York Spot Market, off US54 over the week, down 7.8%. Platinum saw a rally up to the US$875-per-oz. level over the week before pulling back to close at US$845 per oz., up US$5 from the previous session’s close. Palladium gained slightly, finishing the trading period at US$178 per ounce, up US$7.00 from a week earlier.

Among base metals, copper enjoyed a brief rally to the US$1.49-per-lb. level, then gave it all back (and then some) to close the week at US$1.37 per lb. Again, the impact of the tsunami in the Indian Ocean and its expected effect on demand are likely responsible for the selloff. Nickel also saw a stormy week, closing at US$6.34 per lb., down about 30 from a week earlier.

The gap between new lows and highs on the junior mining board narrowed, with only 46 Venture Exchange-listed explorers dropping to new yearly lows, compared with 32 companies rising to new 52-week highs.

The volume leader, once again, was Tyler Resources; almost 5.7 million shares changed hands, and the stock gained 9 to close at $1.13 per share. Speculation continues to run high on soon-to-be-released drill results from Tyler’s Bahuerachi copper-gold porphyry project in Mexico. Recent drilling encountered further high-grade breccia zones.

The second most active trader was NFX Gold, which saw 4.9 million shares cross the floor. The stock closed at 38. There was no news to account for the volume. NFX has gold projects in the Larder Lake Break region of northeastern Ontario.

Third among volume leaders was Murgor Resources, with 3.2 million shares exchanged. The stock closed the period at 20. Drilling on the Windfall property in northwestern Quebec, with partner Freewest Resources, intersected three new gold zones. The intercepts returned up to 10.5 metres grading 3.11 grams gold per tonne in hole 2. The company recently closed two flow-through financings.

Aspiring Guatemalan nickel laterite producer Skye Resources was one of the value gainers, having gained 55 to close at $4.40 per share on volume of 693,000.

The largest value decliner was British Columbia coal producer Pine Valley Mining. The stock gave up some recent gains to close at $6.25 per share, off 70 on a volume of almost 1.1 million shares.