Gold Prices: TSX Venture Exchange Index Wipes Out

The price of gold has been on a wild 15-year ride that appears to be picking up speed to the downside. Gold prices broke convincingly below $1,200 in early July, after being range-bound between $1,200 and $1,300 for several years, and gold has been able to muster little buying interest — or enough to mark-up prices in any convincing way.

For the junior mineral exploration-heavy TSX Venture Exchange, gold’s decline from its record near $1,900 in 2011 has been catastrophic. The complete rout of the TSX Venture Exchange Composite Index (^SPCDNX) is one of the biggest stories in Canadian finance that many are aware of, but that receives little to no attention.

The TSX Venture Exchange Composite Index is down more than 80 percent from all-time highs over 3,300 in 2007, a full four years ahead of the topping of the price of gold.

The prices of shares of Toronto Stock Exchange-listed Kirkland Lake Gold Inc. (TSX:KGI.TO), as one might expect of a medium-sized gold producer in an environment where gold prices have declined 42 percent from their highs, have declined 38 percent over the past five years. A performance that would seem completely respectable.

One might not look far however, just across the TSE, in fact, to Kerr Mines Inc. (TSX: KER.TO), which not long ago spent significant capital exploring a mine located some 45 minutes’ drive east of Kirkland Lake in Larder Lake. Back in 2011, when Kerr Mines was known as Armistice Resources, then Chief Executive Officer Todd Morgan was seen to be very enthusiastic about the company’s prospects, as reported by the Toronto Star.

“The gold was always there. We all believed in it a long time ago.”

Since then, the company has dropped the Larder Lake property, unceremoniously changed its named to Kerr and parted ways with Morgan. Little has been reported as to what events led to this seeming departure from Morgan’s plans. It is not known if the declining price of gold was a factor, or if the gold deposit they were seeking simply did not exist. The price of Kerr Mines stock is down more than 99 percent over the past five years.

While the Toronto Stock Exchange is home to quite a few unfortunate companies, such as Kerr Mines, the TSX Venture Exchange is rife with them, which is what one might expect from an exchange tracked by an index that is down over 80 percent from all-time highs, and still sinking fast. The Financial Post has gone so far as to ask if the TSX Venture Exchange can be saved.

Individual issue price losses on the TSX Venture Exchange have been horrific. There are literally thousands of basically dormant shell companies, existing for no other reason than, seemingly, to raise capital and attract some type of bid to their stock in an effort to boost share prices. Some appear to have small actual operations, while others appear to simply exist to sell stock. For many companies, there seems to be no end in sight to the downward slide in prices, lack of liquidity, and complete freeze-up of capital in the Canadian venture marketplace.

The decline in the price of gold has been especially tough on companies backed by Joe Dwek, the former head of MineralFields Mangement Inc. The Inquisitr has identified over 20 companies with substantial share price losses for which Dwek was involved with underwriting significant blocks of shares.

Jonathon Dwek lists in his public LinkedIn profile that he was a Chartered Financial Analyst with MineralFields and that he analyzed “over 700” companies, of which many were gold miners.

Three of these firms include:

Red Pine Exploration Inc.

Shares of Red Pine Exlorations (TSXV: RPX.V) are down 87.8 percent in price over the past five years. They are a gold miner that recently completed a share consolidation, which saw their stock slide further. Dwek and MineralFields financed at least one Red Pine share offering at prices much higher than today’s Red Pine share price. Red Pine reports that they are actively engaged in exploration, this appears to have little effect the the slide in share prices.

Mountain Boy Minerals

Over the past five years, Mountain Boy Minerals Ltd. (TSXV: MTB.V) share prices have declined 94.7 percent. They last issued financial statements in 2011. Dwek and MineralFields also financed Mountain Boy share issues, at much higher prices than observed today.

Northern Gold Mining

The price of Northern Gold Mining Inc. (TSXV: NGM.V) stock has declined by 93.5 percent over the five years. Northern Gold regularly reports seemingly encouraging operating results and actual production. However, this appears to have little effect on the price of the stock. Like Mountain Boy and Red Pine, Northern Gold has had share offerings underwritten by Dwek and MineralFields.

There are literally thousands of other penny stocks like this on the TSX Venture Exchange, with at least 700 being, at least partially, financed by one person: Joe Dwek. One might wonder if there will ever be any end in sight to the TSX Venture Exchange price bloodletting: it doesn’t appear that the price of gold is going to be able to offer much help anytime soon.

Dwek has made statements regarding “flow-through” shares, something that he apparently specialized in. The Timmins Press reported that incumbent Member of Parliament Charlie Angus had hotly debated in favor of flow-through shares, many of which, despite some tax benefits, have resulted in seeming widespread investor losses resulting from price routs.

[Gold Photo by Mario Tama / Getty Images – Miners Photo by Berni Schoenfield/Three Lions/Getty Images]