Weakness in the gold sector proved to be a major blip for Toronto stocks which fell on Monday, as investors collected profits on last week’s rally to an eight-month high. Gold stocks fell 1.75 per cent and materials stocks dropped 1.3 per cent as the precious metal declined in Comex trading.

Agnico-Eagle Mines (AEM.TO) was down 2.8 per cent, Goldcorp (G.TO) dropped 2.6 per cent and Yamana (YRI.TO) was down 2 per cent. August gold fell $12.30 to $945 per ounce, while the more-actively traded December gold fell to $946.90, down $12.60 on the session.

Thompson Creek Metals (TCM.TO) added 3 per cent after the stock was upgraded to `Hold’ from `Sell’ at Canaccord Adams, while Northgate Minerals Corp (NGX.TO) declined 9.25 per cent after the company reported second quarter net earnings of US$ 5.4 million or US$ 0.02 per share, compared to US$ 1.85 million or US$ 0.01 per share last year. Shares were down 5.6 per cent on Monday.

However, the continued enthusiasm for metals can be tied to a combination of devaluation of the Greenback and hopes that western recessions are bottoming. The deteriorating U.S. Dollar is an element that will have to be weighed against the demand picture for the next decade, note traders.

They add that given the massive stimulus and quantitative easing that’s gone into the market, gold could perform fairly well. Serious monetary inflation would eventually result in price inflation, and when that happens, it’s positive for gold, state analysts. If fear and inflation win out, the gold price will continue to rise: some predict a volatile uptrend through the $1,200 mark over the next few years.

Though there are more than 2,000 junior mining and exploration companies listed around the world, some companies have the potential to find deposits and convert them into mines; Like for instance: AuEx Ventures Inc (TSX: XAU), which is a joint venture with Fronteer Development Group (TSX:FRG).
AuEx owns 49 per cent. Then there is Miranda Gold Corp (TSX:V:MAD) which is actively exploring in Nevada. Traders say this is a group that develops conceptual ideas and then brings in companies with more money to spend the high-risk dollars drilling those holes.

Nevada appears to be where the action is. It’s a gold province and the deposits there can be massive, especially these Carlin-style systems. The Carlin Trend alone has over 70 million ounces and individual deposits host tens of millions of ounces. Incidentally, when you look at Barrick Gold Corporation (NYSE:ABX) and Newmont Mining Corp (NYSE:NEM), that’s where they started. Barrick is still finding deposits in Nevada.

Then there is Kiska Metals Corporation (TSX.V:KSX) and Virginia Gold Mines Inc in Quebec, which spun off Virginia Mines Inc. (TSX:VGQ), made a fantastic discovery in Quebec and sold it to Goldcorp (TSX:G) (NYSE:GG).

Analysts also mention CGA Mining Ltd (TSX:CGA) (ASX:CGX) in the Philippines, which are just now into production with about 3 million ounces in reserves and 8 million in resources. They will be producing around 120,000 ounces a year, traders state.

The richest discovery out there is held by a company called Andean Resources (TSX:AND) (ASX:AND) in Argentina. They are drilling out a very high-grade vein system that will be a very profitable project. And then there is San Gold Corporation (TSX.V:SGR) in Manitoba. San Gold has a small mining operation, around 80,000 ounces a year, which should be increasing soon, state analysts.

Others on the watch list include Kaminak Gold Corporation (TSX.V:KAM) Kaminak has picked up some property in the Underworld Resources Ltd (TSX.V:UW) area in the Yukon, where Underworld has a gold discovery going. Kaminak is trenching there now. Yet another probable gold digger is Magma Metals Ltd (TSX:MMB), an Australian company.

Junior mining

Osisko’s Canadian Malartic gold project, now under development in Quebec, has captured the attention of one of the world’s largest gold miners, Goldcorp, which now owns nearly 13 per cent of the junior explorer. Vancouver-based Goldcorp’s interest in Osisko Mining goes back a long way. Osisko, whose Canadian Malartic project is considered a hot prospect in Quebec’s Abitibi gold camp, an area that has historically mined 60 million ounces of gold, is in the news.

Goldcorp announced Monday it has acquired 8,462,500 common shares and 4,271,500 common shares purchase warrants of Montreal-based Osisko Mining (TSX: OSK) and now controls over 33,842,500 shares of the junior explorer. Goldcorp added that the company “has no present intention to increase its holdings in Osisko.”

Osisko has 6.28 million ounces of proven and probable gold reserves at Canadian Malartic, as well as 3.65 million measured and indicated ounces of gold. Mining and milling equipment has already been purchased for delivery this year.

The Canadian Malartic gold deposit and adjacent mineralized zones are being developed into a large-scale open pit mining operation. The company asserts, “The Canadian Malartic deposit currently represents one of the biggest gold reserves in Canada for a single deposit, and is still growing through ongoing drilling on new mineralized zones.

It is anticipated that the US$ 789 million project will average 591,000 ounces of gold production over a 10-year mine life in a mining friendly jurisdiction. Total mine production is planned to be 150,000 tpd.

The company reported nearly C$ 400 million in cash and nearly C$ 370 million in working capital as of June 30, 2009. The explorer entered into a financing agreement with the Société générale de financement du Québec (SGF) for a C$ 75 million, five year convertible debenture last month. It raised an additional C$ 400 million in an equity financing in February. SGF is an industrial and financial holding company of the Government of Quebec. Osisko is currently is discussion with several institutions and strategic investors to complete the project financing requirements.

Another junior miner beat analyst expectations on the back of a 51 per cent increase in gold sales. Jaguar Mining Inc (JAG.TO) said on Monday it swung to a second-quarter profit, helped by a sharp jump in gold sales and foreign exchange-related gains. The Concord, New Hampshire-based miner, which is listed in Toronto and operates in Brazil, earned $9.7 million, or 12 cents a share, in the quarter, compared with a year-before net loss of $0.4 million, or 1 cent a share. The company said it held cash and equivalents of about $82.3 million at June 30, while it spent $20.1 million on growth projects during the quarter.

President of Yukon-Nevada Gold Corp (TSE:YNG; Frankfurt XE: NG6) Robert Baldock has said that the company has negotiated a $4,000,000 non-brokered private placement to sell up to 40,000,000 units at a price of $0.10 per unit. The placement will be closed in tranches, the first tranche having closed on August 7, representing new capital of $1,882,972. The second tranche is expected to close shortly.