Gold thrown overboard
Thursday, October 02, 2008
One of the few safe havens for panicky investors flipped upside down on Thursday, when gold became the last – well, close to last – place to be.
The flip began with the changing fortunes in the U.S. dollar, after investors bet that the European Central Bank will start cutting it key interest rate, making U.S. rates look relatively more attractive to investors. Another theory is that foreign banks are buying U.S. dollars, after blowing their brains out on U.S.-dollar denominated assets, to pay back depositors.
Either way, gold, which is priced in U.S. dollars fell $43 an ounce, to $844. After beginning the day in bad-but-not-awful shape, gold mining stocks took a turn for the worse in afternoon trading – and investors weren't differentiating among the various names based on their respective costs of production.
Among Canadian stocks, Barrick Gold Corp. was down 11.2 per cent, Goldcorp Inc. was down 13.2 per cent and Kinross Gold Corp. was down 12.4 per cent. In the United States, Newmont Mining Corp. was down 9 per cent.
If you're still on the lookout for safe havens, Fairfax Financial Holdings has been doing wonders in this volatile environment, thanks to its chief executive's bearish bets on the market. The stock rose 3.7 per cent on Thursday afternoon, bringing its one-year return to 49 per cent. That's a good return at any time, but it's incredible during a bear market. |
