Bullion drives Canada gold shares up, Barrick leads

TORONTO (Reuters) - Strong gold prices drove shares of Canadian gold miners higher on Friday, sending some to the highest levels in months and making Barrick Gold Corp ABX.TO the country's biggest publicly traded company.

Aaron Regent, president and chief executive of Barrick Gold Corp listens during a news conference in Toronto, January 16, 2009. REUTERS/Adrien Veczan

The price of gold popped above $900 an ounce for the first time since October 10, helped by a sliding U.S. dollar and flight to safety investments.

This sent the Toronto Stock Exchange’s S&P/TSX global gold index up 5.3 percent, its highest level since July of last year.

The index has more than doubled in value since bottoming in October, when crashing asset values prompted hedge funds and other investors to liquidate resource stocks, even as gold prices sat at relatively high levels.

“We’re getting a long overdue closure in the gap between bullion prices and the shares,” said John Ing, president of Toronto investment dealer Maison Placements.

He said the sector is being fed by its traditional status as a hedge against inflation and a weak U.S. dollar. Many analysts expect inflation to rise and the U.S. dollar to drop as billions of dollars in U.S. stimulus programs work their way into the market.

Many gold mining stocks are now trading not far off the record highs reached early last year when gold prices hit record levels above $1,000 an ounce.


The rise of Barrick to take the top spot on the exchange comes as traditional Canadian heavyweight stocks such as Royal Bank of Canada RY.TO, EnCana Corp ECA.TO, and Research In Motion RIM.TO have remained under pressure.

Barrick was up 8.5 percent at C$48.49, its highest point since July and pushing its market capitalization above C$42 billion, eclipsing EnCana’s C$40.6 billion.

Goldcorp G.TO, the world's No. 2 gold company by market capitalization, was up 7.7 percent at C$35.82, while Kinross Gold K.TO rose 6.1 percent to C$22.42, and Yamana Gold YRI.TO rose 9.2 percent to C$9.50.

Smaller players also climbed. NovaGold NG.TO, which struggled with funding problems late last year, was up 19 percent at C$2.82, while Golden Star Resources GSC.TO rose 6.4 percent to C$1.49.

Gold dropped below $700 an ounce last October as the stock market crash forced investors to liquidate some holdings to raise cash, but is expected by many to charge back above the $1,000 level this year.

Precious metals consultant GFMS said last week it expects gold to rise as high as $1,080 an ounce in 2009, although it sees volatility early in the year.

($1=$1.24 Canadian)

Reporting by Cameron French; editing by Peter Galloway