Stockpile: Gold on a high again as silver also makes a mark

Gold went beyond the US$1,300 mark for the first time on September 24 and was joined in lofty territory by silver, which climbed to a 30-year high.

For the second week running the US dollar was headed for a fall, prompting investors to look at bullion, and now silver, as wealth protection.

Doubts over the continued revival of world economies is said to be behind the ongoing rise of gold. Bernard Sin, from bullion refiner MKS Finance SA, said: “Gold is showing there is no confidence in the (US) dollar.”

Silver has made gains for the past five weeks and added more than 1% to reach US$21.39/oz by week’s end, the highest since 1980. The metal, which is in demand for batteries and other industrial uses, is on its best streak since 1974 after improving during the past seven quarters.

On the London main market, the world’s largest silver producer, Fresnillo plc, was one the week’s best performers with a 5% gain. Of the gold miners, Randgold Resources Ltd stood out with a 3.5% increase.

The major miners (BHP Billiton, Rio Tinto and Xstrata) were grouped amongst the winners, albeit with just marginal gains.

BHPB shaded its fellow heavyweights with a 3% advance despite being informed that Potash Corp of Saskatchewan has taken legal action against the Anglo-Australian company over last month’s hostile US$40 billion takeover bid. Canada’s PotashCorp went as far as alleging BHPB tactics prior to the offer were designed to “manipulate and confuse” the market, lowering the company’s value.

Shares in Rio Tinto, which released plans of a US$230 million investment on September 24 to expand iron-ore export capacity in the Pilbara, rose 2%. Following the expansion, the group’s capacity in the region will be 230Mt/y.

The leading stock on the main market this week belonged to Sydney-based International Ferro Metals Ltd, which was up 10% despite not making any announcements. Heading downwards this week was iron-ore producer Ferrexpo plc, which shed almost 10% of ground as the worst resources stock.

On AIM, Solomon Gold plc outdid its market-leading performance of last week by surging almost 350% higher. The gain was on the back of a second announcement in as many weeks, both concerning encouraging high-grade surface-sampling results from its 100%-owned Fauro Island project on the Solomon Islands. Last week, the Brisbane-based company reported that sampling at the project indicated “significant” gold mineralisation (up to 173g/t). This week's release contained details of additional, albeit lower-grade results, and noted that 32% of samples returned greater than 1g/t Au.

A boost in production in Azerbaijan has guided Anglo Asian Mining plc 65% higher. The company said production would now be 60,000oz in 2010, up from the previous forecast of 53,5000oz.

Serabi Mining plc has gained more than 50% after receiving news that Brazilian authorities had lifted a suspension on the Palito gold project, and are reviewing a £2 million fine against one of the company’s subsidiaries relating to flora and fauna.

Others to make significant gains included explorer Red Rock Resources plc and Irish miner Galantas Gold Corp, which added 80% and 50%, respectively.

The biggest faller on AIM was Pan Pacific Aggregates despite reporting a narrower loss for the first half of 2010. The company, which said it was meeting its targets of achieving production and generating revenue at Quading Quarry, shed more than 16%.

Others with notable losses included Canada’s Eastern Platinum Ltd and Kazakh-focused Hambledon Mining plc, both dropping about 11%.