There’s an eerie feel in the gold market these days as obscure junior penny stocks rocket out of control like former New York Stock Exchange CEO Dick Grasso’s bank account.

Worse, my ol’ pal Bre-Xer has quit his gig dealing blackjack to return to the gold speculation game, which may be a sell signal in itself.

It feels like the eerie calm before a tornado or the day before the Bre-X geologist took a freefall out of a helicopter over the Indonesian jungle, taking the company’s shares down with him.

Can’t you just picture Mark Twain wagging a bony finger and admonishing the over- zealous gold bugs? “A gold mine,” Twain once opined, “is a hole in the ground with a liar on top.”

In recent weeks, speculators have been salivating over publicly traded gopher holes and turning their charts into the face of Mount Everest.

The penny golds and silvers have breathed new life into Canada’s baby stock exchange that had been all but forgotten since dot-com mania.

Dot-gold anyone?

Even if you do believe we’re in the early stages of a prolonged gold bull market, many precious metals juniors on the TSX Venture appear overdue for a sharp correction.

While laggard large caps such as Placer Dome (PD-TSX), the company that once made a takeover offer of $4.7 billion for worthless Bre-X, show modest gains despite gold’s thrust toward the $400-per-ounce US plateau, speculators are having a field day with exotic holes in the ground.

Year to date, Northern Lion Gold (NL-TSXV) has roared from three cents to 94 cents, up 3,033 per cent, and the company still hasn’t begun drilling at its Finnish property.

The stock has a way to go to match that wild Bre-X ride of the 1990s (if you bought Bre-X at its low of four cents in 1991 and sold at $286.50, the peak price on a pre-split basis, you can write our next column on how to rake in a $7-million profit on a $1,000 investment).

The second-highest flyer this year is something called Nucanolan Resources (NCL.H-TSXV), up 2,300 per cent on its hole in the ground. Incidentally, the H in the symbol designates Nucanolan as a stock that trades on the TSX’s new exchange for companies that fail to meet listing requirements on the Venture. Isn’t that comforting?

MAG Silver (MAG-TSXV) is up 1,800 per cent and Denver-based Brave Resource Partners (BRV.H) is up 1,700 per cent.

Some small caps have also been on a tear. Eldorado Gold (ELD-TSX), for instance, has rocketed 1,200 per cent in 18 months.

As Bre-X, the greatest mining scam in history, taught us, you can’t take your eye off the ball when you’re riding speculative mining stocks.

The Bre-X hoax wiped out countless paper fortunes when it was revealed the Calgary company had falsified core samples from its claim in Busang, Indonesia, by salting them.

Speculators should also be wary of CEOs with dubious reputations in the public markets. Bre-X was the brainchild of CEO David Walsh, a stock promoter who knew how to play into the hands of small-time investors and institutional investors alike (Walsh died of a brain aneurysm in 1998 after the scandal was exposed.)

Before Bre-X geologist Michael de Guzman gave the ultimate sell signal, “jumping” to his death from a helicopter over the Indonesian jungle in what was believed to be suicide, Placer Dome and Barrick Gold, Canada’s two gold mining giants, tried to woo Bre-X with takeover offers and Lehman Bros. described the Busang claim as the “gold discovery of the century.”

I, too, was stricken by Indonesian gold fever, which has resulted in a longtime position in a languishing Vancouver-based play on the Venture exchange with an Indonesian property.

This company actually has a hole in the ground that produces real gold and silver (according to its financial statements) and trades at a price/earnings ratio of 5.

What a bore! No wonder the stock over the past month has traded 1,100 shares at a nickel. n RED HERRING: Just imagine how Wireless Matrix (WRX-TSX) stock would’ve been punished a year ago in a ruthless market over a disclosure issue.

But, with tech stocks on fire, Calgary-based Matrix drew a pardon from the market after the company admitted it failed to properly disclose in a recent public offering that CEO John Herring had sold 55,000 shares as part of a divorce settlement.

Matrix at least dealt with the issue promptly, paying shareholders of the bought deal 25 cents per share and Herring resigned from the board.

Remarkably, the stock survived a wild week with a gain of 2.5 per cent.

* NO SAGE WORDS: “The board of directors has absolute confidence in the integrity and accuracy of the assay results and resource calculations (70.95 million ounces) by the company.”

– Bre-X CEO David Walsh, March 26, 1997



HOT ALBERTA STOCK: BIOMIRA
BRA-TSX $3.14
Up $1.15 (+57.8) on 5.2 million shares (for week ending Sept. 19).
A spokesman at Biomira’s Edmonton office couldn’t explain the wild surge in the share price. Perhaps, more than anything, it’s just that biotechs are back in style – for the moment, anyway. Biomira also announced it would be making a presentation of its cancer therapeutic drugs to institutional investors at an upcoming Toronto conference.



COLD ALBERTA STOCK: EPICORE BIONETWORKS
EBN-TSXV Four Cents
Down three cents (-42.9%) on 609,300 shares
(for week ending Sept. 19)
Long-suffering Epicore shareholders were popping champagne corks when the stock hit nine cents, up from one cent in less than five months. Alas, the rally lost its fizz in a hurry
as shares in this Calgary aquaculture firm took a nosedive for no apparent reason.