The Sept. 16-22 trading period proved to be one of the most tumultuous — and memorable — in recent history, as the federal government ratcheted up its direct involvement what may be the worst U. S. financial crisis since the Great Depression.
On Tuesday, Sept. 16, the federal government took over American International Group. (In exchange for a 79.9% stake in the insurance giant, AIG gets an US$85-billion revolving loan.) U. S. markets crashed the following day, with the Dow Jones Industrial Average falling about 4%. The markets rebounded strongly on Thursday, rising about 3.9% (the best day in six years), on news that U. S. Treasury Secretary Henry Paulson planned to create an entity to absorb bad mortgage debt — similar to the Resolution Trust Corp. that was set up in 1989 to take on bad debt from the savings and loan crisis. Stocks moved up again on Friday when the U. S. Securities and Exchange Commission banned short-selling in shares of about 799 financial institutions until Oct. 2. The emergency measure achieved its goal of calming markets, sending the DJIA up 368 points, or 3.34%. But by Monday night, the markets had veered downward again, as investors started to wonder whether a massive US$700-billion government bailout unveiled on Saturday to clean up bad mortgage debt will be enough to save the fragile banking sector.
Overall, the trading period saw the DJIA fall a total of 43.33 points, or 0.39% to 11,015.69. The S&P 500 Index moved down 6.51 points, or 0.53%, to 1,207.09; and the Nasdaq dropped 28.92 points, or 1.3%, to 2,178.98.
So where did that leave mining stocks? Cautious investors seemed to take succour in gold. The Amex Gold Bugs Index rose 72.77 points, or 25.86%, to 354.13, while the Philadelphia Gold & Silver Index climbed 27.73 points, or 22.74%, to 149.64. Agnico-Eagle Mines scored the third-largest gain, soaring US$14.78 to close at US$65.93.
The second, third and fourth most actively traded stocks were all in the gold space. Barrick Gold vaulted US$10.20 to close at US$38.14, Goldcorp gained US$9.17 to US$36.29 and Freeport-McMoRan Copper & Gold moved up US$6.49 to US$72.33. Newmont Mining mounted US$6.05 to US$44.43 and Kinross Gold advanced US$4.66 to US$17.62.
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