''I would bet if somebody says they know what they are talking about is just flipping a coin,'' he said.
However, longer term he believes it will move higher to about US$325 as it is helped by its association with the U.S. "
Canadian gold stocks hit as bullion prices tumble
01:33 p.m Aug 28, 1998 Eastern
By Scott Anderson
TORONTO, Aug 28 (Reuters) - Canadian gold shares were hit hard on Friday after the yellow metal slumped to its lowest level in almost two decades in Europe.
The Toronto Stock Exchange's influential gold and precious minerals index was down 4.8 percent in midday trading on Friday following a drop of 6.2 percent on Thursday. In the past year, the heavily weighted gold index has fallen 46.4 percent, with a hefty 16.3 percent of that coming in the past five days.
Canadian gold mining heavyweight Barrick Gold Corp.
(ABX.TO) dropped to a 52-week low of C$20.30 on the Toronto Stock Exchange before pulling back slightly to trade down C$1.85 or 8.2 percent at C$20.70. Vancouver-based Placer Dome Inc. (PDG.TO) was off C$0.95 or 6.5 percent at C$13.70, up from a 52-week low of C$13.40. Teck Corp. (TEKb.TO) was down C$0.25 or 2.7 percent to C$9.55.
''People who are looking for a safe haven are not jumping at gold but looking to U.S. bonds,'' said Wendell Zerb, a mining analyst at Pacific International Securities in Vancouver. ''The gold price relative to some currencies seems quite high. So either they can't afford to buy it or are just choosing to go to bonds.''
He said the international fiscal problems in Russia and to a larger extent Asia has killed interest in holding gold.
In afternoon trading in London, gold fell to a 19-year-low of $273.40 an ounce, down $5.10. Similarly in New York, the December price for gold on the Comex Division of the New York Mercantile Exchange slipped to $276.30, down $3.80.
This a far cry from the heady days in 1996 when the price of gold hit a five-year high of $415.50.
The shift from gold to the U.S. dollar and bonds is a dramatic change from the past when many investors viewed gold as a safe haven during turbulent times.
The large drops on the broader TSE, Zerb said, are directly related to the perception that Canada is largely viewed as a resource-based country.
''Foreign investors are not interested in basically investing in countries largely pegged to commodities,'' he said.
With the uncertainties in the markets and the shakiness of the Canadian dollar, Zerb is unsure about the future of the precious metal. ''I would bet if somebody says they know what they are talking about is just flipping a coin,'' he said.
However, longer term he believes it will move higher to about US$325 as it is helped by its association with the U.S.
dollar.
($1-$1.57 Canadian)
((Scott Anderson, Reuters Toronto Newsroom, 416 941-8106, toronto.newsroom+reuters.com))
Copyright 1998 Reuters Limited. |
