STOCK MARKETS — Euro-currency scare one reason for bullion’s

For the first time in a long while, Canadian gold equities showed up in the financial pages of the dailies under the heading “Biggest Net Losers.” It happened on Aug. 6, when gold bullion prices took an alarming turn, falling from a high of US$410 per oz. (a day earlier) to as low as approximately US$376.

As always, a multiplicity of reasons surfaced for gold’s dismal sell-off — an overheated bull market that was due for a correction, growing realization that inflation is not returning, a Euro-currency crisis that was brought under control, and so on.

Likely, the Euro-currency problem, which caused the initial runup in gold to US$410, was the prime culprit. After the currencies were “stabilized” by central bank intervention, gold started coming off its highs. This decline then turned into a rout when sell-loss orders were triggered in the multi-million-dollar portfolios of the big institutional holders of gold. That, at least, seems the most plausible explanation.

But by Aug. 10, gold was again on the mend. The London first fix was slightly above US$380, and on Aug. 11 was US$381. The Toronto Stock Exchange Gold and Silver Index topped out at 10,116 when gold spiked to US$410, plummeted to 8848.45 in what was to be the largest single-day sell-off since 1988 and, by presstime, had regained some ground

In that environment, of course, the gold equities had quite a ride. Franco Nevada, for example, dropped $3.75 to a low of $67.25 on the day gold nose-dived; American Barrick fell $2.75 to $31.50; Lac Minerals $1.37 to $10.87; Placer Dome $2 to $25; Agnico Eagle $1.87 to $13.12; and Hemlo Gold $2.25 to $12.50. By Aug. 10, most had recovered some ground — Franco to $71.50; Barrick $33.12; Lac $11.50; Placer $26.62; Agnico $13.62; and Hemlo $13.25.

Placer was also in the news over our report period because its corporate structure is undergoing an overhaul. Placer denies suggestions that this is a first step in a move out of Canada. It says it has no intentions of eventually pulling its Vancouver head office to friendlier tax climes. Barrick too garnered headlines by announcing it was taking to the courts to secure patents for the Goldstrike mine. Without the patents, Barrick, as other producers on unpatented land, could suffer under U.S. government reforms which may include an 8% royalty on production. High-profile Barrick applied for the patents in February. In the past, patent approvals took less than a month to secure.

Among the junior gold explorers and miners, sliding bullion prices also had an effect. Hycroft lost 40 cents closing at $3.70. It has a gold mine near Winnemucca, Nev. Greater Lenora, which earlier this summer jumped on news of Hemlo Gold’s participation in Lenora’s property in Larder Lake, Ont., shed 39 cents during our reporting week to close at $1.40. Cornucopia was another loser, dropping 35 cents to $3.05 in spite of reports that it was purchasing a gold project near Silver Peak, Nev.

Chase Resources also fell after a “good news” report that it had secured $2.75 million in financings. It lost 40 cents to close at $4.35. Queenstake, meanwhile, lost 48 cents to close at $2.52.

Among the bigger gainers for the week in the base metals sector was Platinova, which rose nearly 35% to $4.10, a gain of $1. Since no recent news had come out, The Northern Miner contacted Platinova director Earl Curry, who said the market was probably anticipating drill and geophysical results from a zinc play in the extreme northeast end of Greenland.

In July, Platinova sent a Hercules aircraft out of Yellowknife, N.W.T., with a drill and disassembled helicopter aboard. The equipment is on-site at the Peary Land discovery (as it’s called).

However, the big mover in juniors was Key Anacon Mines. It was reported in this space last week that a base metal prospect had been uncovered in the Bathurst camp of New Brunswick. As it turns out, it was the Key Anacon property being drilled by Rio Algom (for details, see full report on page 1). Key Anacon gained 87 cents during the week and closed Aug. 11 at above $2, a gain of approximately $1.60 in about a week.