Stock markets scrape bottom

Anticipating an impending economic slump, stocks on all Canadian exchanges started reversing their long uptrend, ending 1981 sharply lower. In fact, the TSE suffered its third worst year in a quarter-century. (The drop was the worst since 1974. The market gained in each of the six years through 1975-1980.)

Of the 1,175 issues that traded on the TSE, 964 finished in the losing column, with only 183 posting advances. Mines, especially the golds, were hard-hit.

The total value of all shares traded on Canada’s five exchanges slumped 14.7% to 32.6 billion.

As we enter the new year, we welcome the latest cut in the Canadian prime lending rate, which, at 16.5%, has dropped to its lowest level in more than a year.

This move, certainly, will lend encouragement to those individuals and corporations whose entrepreneurship had almost been stifled by record-high borrowing costs. It may even help to avoid a few bankruptcies and plant closures as consumers are encouraged to return to the market for big-ticket items such as houses and cars.

While base metals showed some stability around their lowest levels in months, precious metals continued to slide, with little support coming from the investment community. Additional losses for gold and other precious metals can be anticipated as the U.S. dollar maintains its upward momentum on expectation of higher interest rates in coming weeks.

The low for the past week occurred when, at one stage, gold in London dipped to 28-month low of $366 per oz.

The weakness of the gold market is traced to recent selling by the metal’s traditional buyers, including Middle East countries and the German central bank.

Some analysts expect the price of gold to drop further by mid-year to between US$325 and US$330 per oz. before recovering.

The year 1982 will be a milestone for Denison Mines, as it will mark 25 years of continuous production at Elliot Lake, Ont. As Stephen Roman, chairman and president, says: “We will diversify to increase shareholders’ interests, and we remain committed to uranium. Nuclear energy will play an increasingly important role throughout the world in years ahead.”

Notwithstanding the depressed nature of the general economy, Denison emerged through 1981 with record revenue and its second-highest annual earnings.

It is no secret the Canadian economy is in a slump. Nevertheless it still comes as something of a shock to many of us to learn, through Statistics Canada, that there were more than 1 million Canadians out of work in December.

It’s one of the bleakest employment pictures seen in this country since the Great Depression of the 1930s — a sad commentary on one of the richest countries in the world.

These latest figures will surely increase political pressure on Ottawa to do something. Maybe NDP finance critic Robert Rae hit the nail on the head in calling on the government to “scrap its November budget and start all over again.”

There can be no question the Liberal administration in Ottawa has underestimated the depth of this recession, for which it must take the brunt of the blame.

True, we have a long-standing and close relationship with the U.S. economy, but to blame that country for our economic woes is nothing short of sinful.