Firm’s Gold Sale Stirs Unease Over Metal’s Price

Surging prices of precious metals have helped stoke this year’s bull market in commodities. But a surprise move by Canadian gold-mining firm Goldcorp Inc. on Wednesday gave some investors pause.

Goldcorp announced an unexpected cash dividend but said the payout would be funded by the sale of a gold stash the firm had built up.

The sale news triggered concerns that the firm may believe the metal’s price is peaking after hefty gains since 2001.

Goldcorp had accumulated nearly 270,000 ounces of bullion over the last two years by holding back some of its own mined metal as well as by buying on the open market.

The company said Wednesday that it began selling the cache after Sept. 30 and that it had sold the entire amount.

Goldcorp was emphatic that gold was not near its peak and that the company was once again hoarding. But some analysts said the sale might send a signal to the market that the Toronto-based gold miner believed bullion had topped out.

“In my opinion, the market should have expected this,” said Haytham Hodaly, an analyst at Salman Partners Inc. in Vancouver. “But does it send a bearish signal? Probably.”

Near-term gold futures in New York dipped $2 to $406.20 an ounce. The price had hit a seven-year high of $408.20 on Tuesday.

Goldcorp’s stock tumbled 93 cents, or 5.5%, to $16.08 in New York Stock Exchange trading. The stock hit a record closing high of $18.30 on Dec. 1.

Other gold shares also fell. Placer Dome Inc. dropped $1.07 to $16.41; Newmont Mining Corp. fell $2.07 to $45.70.

Goldcorp, which in the past liked to trumpet that it owned more gold than the Bank of Canada, said it already had begun to rebuild its gold inventory and would again hold back 10% of production because it believed bullion would rise more.

“If we truly believed gold was going down, we wouldn’t be doing this,” said Chris Bradbrook, Goldcorp’s corporate development director.

Calling it a “holiday gift,” Goldcorp said investors would be rewarded with an extra dividend of 10 cents a share paid from the $40 million in pretax profit the gold sale garnered.

The firm, which mines most of its gold from the rich Red Lake deposit in Ontario, said it had sold gold at an average price of $388 an ounce this quarter.

Prices of other precious metals also have been hot this year, in part because the weak dollar has made the metals less expensive for foreign buyers.

In New York, platinum futures prices Wednesday reached a 23-year high of $810.70 an ounce.

Near-term silver futures hit a three-year high of $5.64 an ounce Tuesday, then slipped to $5.60 on Wednesday.