That comparison with the Lehman Brothers investment bank collapse of 2008, which sparked the global financial crisis, sent a shudder through the broader finance sector because of the contagion inference.

Some of the falls in the world of make-believe currencies were spectacular in the U.S. on Wednesday. Bitcoin fell by 15%. Binance dropped by 18%, and Solana crashed by 45%. Most of the crypto stocks started to recover yesterday as buy-the-dip traders rummaged around for bargains.

But to put the crash into perspective, sector-leader Bitcoin traded down to US$15,600 before clawing its way back to US$16,355 – a zillion miles from a price of US$67,000 exactly 12-month ago.

Gold might have been a beneficiary of the crypto rout, climbing back over US$1700 an ounce, though it’s probably too early to judge the long-term effects of the crash, which was sparked by the failure of the FTX crypto exchange.

Where a comparison with the failure in 2008 of the Lehman Brothers investment bank and the crypto crisis can be drawn is how both events exposed the brittleness of the overall financial sector, which is struggling with rising interest rates and the end of central bank support.

The return of gold, which loves a crisis, was boosted by news that central banks have been active buyers of the metal over the last three months, followed by support this week from two of the world’s biggest banks, Morgan Stanley and UBS, with both tipping a higher gold price next year.

Morgan Stanley, in a research note headed “Going for gold” said the potential slowing of interest rate increases and a peaking of a U.S. dividend tracking fund (the DVY fund) “could propel the gold price higher and allow multiples for gold stocks to expand after a prolonged decline”.

UBS said that while 2022 had been bad for gold “and a disaster for gold equities”, next year could be very different as the interest rate cycle rolled over, which meant that “holding a long gold position would offer an attractive risk/reward” with the bank’s strategy team tipping gold to rise to US$1900/oz by the end of next year.

During the week, gold peaked at US$1715/oz, its highest for six week, but was weakening by Thursday, though the late correction did not have a major effect on gold stocks as measured by the ASX gold index, which rose by an impressive 13.5% over the week.

Gold sector leaders, including Northern Star and Evolution performed strongly, up 15% and 21% respectively. Northern Star to $9.97. Evolution to $2.40.

Smaller gold stocks joined the rally. Bellevue added 10c (13.5%) to 84c De Grey rose by 18c (17%) to $1.22. Silver Lake put on 11c (10%) to $1.23, while Catalyst was the best of explorers, adding 23c (21%) to $1.33 after reporting a maiden reserve of 115,000 ounces at the Henty mine in Tasmania.

Resolute Mining was quick to capitalise on improving gold sentiment launching a $140 million capital raising priced at 16c a share, well below last sales at 21c with management saying the extra cash was the final step towards sustainable production.

The flipside of that good news was another crisis at Gascoyne Resources, which stopped mining at its troublesome Dalgaranga mine in WA after a cost explosion in the September quarter to $3135/oz. Trading in the stock was suspended on Tuesday.

Overall, the Australian market as measured by the all ordinaries index, rose by 1.5% this week with the metals and mining index up 4.25%.

After gold, the best share price performances came in the battery metals sector where interest in the electric vehicle revolution refuses to fade, and might not do some for some time with J.P. Morgan, an investment bank upgrading its opinion of lithium thanks to “persistent undersupply”.

That view, based on an observation that there was “no sign of pricing tension easing” with spot prices rising, saw the bank eat a bit humble pie in upgrading its advice on Pilbara Minerals from sell to hold with the price target for Pilbara lifted to $5.20, which is 15c below last trades at $5.35.

News and other price moves in the lithium sector included:

  • Cygnus Gold, up 7c to 57c after reporting the start of a maiden drilling program at the Pontax lithium project in Canada.
  • Green Technology Metals, up 6.5c to $1.08 after reporting a new lithium discovery at its Seymour project in Canada.
  • Trek Metals, up 1.2 to 11c after reporting high grade lithium chip samples of up to 3.07% from its Tambourah project in WA, and
  • Calidus Resources added 3.5c to 40c after reporting that drilling had confirmed lithium down to 250 metres at its Spear Hill discovery in WA.

Copper stocks performed well, led by Sandfire, which rose by a sharp 66c to $4.21 (up 18%) after announcing the appointment of seasoned mining company executive Brendan Harris as its new chief executive.

OZ Minerals moved back above BHP’s $25 takeover offer with a rise of 96c to $25.50 with Shaw stockbrokers sticking to a $30 price tip, and perhaps a price as high as $40 using the struggling Rio Tinto proposed takeover of Mongolian copper partner Turquoise Hill as a yardstick.

AIC Mines gained another 1.5c to 46c after confirming its merger with Demetallica which rose by 1c to 35c while SolGold in London gained 0.5 pence to 17p after finding a funding solution for the next stage of work at its Cascabel project in Ecuador.

Rare Earths had a mixed week with most price moves modest led by relatively new OD6 Metals putting on 4.2c (16%) to 31c after reporting high grade assays from drilling at its Splinter Rock clay-hosted project near Esperance in the south of WA with a best hit of 6729 parts per million (0.67%) total rare earth oxides.

Other news and moves among rare earth stocks included Australian Rare Earths adding 1c to 36c following the receipt of further strong assays from its Koppamurra project in South Australia, and Rincon rising by 1.5c to 14c after playing the nearology card for its Kiwirrkurra project in WA which shows some geological similarities to the nearby West Arunta niobium and rare earth discovery of WA1 in central WA.

Nickel stocks firmed after a 3% rise in the nickel price. Mincor added 21c to $1.66 and Centaurus was up 10c to $1.03 but the market was left waiting for a report from NickelX which asked for a trading halt with its shares at 14c pending the release of an update of drilling underway at the Cosmos South project in WA.

Other news and market moves this week included:

  • Iron ore stocks gaining ground on the strength of reports that China might end is draconian Covid lockdowns, led by Fortescue Metals which added $1.40 to $16.77 and Champion Iron, up 34c to $5.16.
  • Jervois Global added 2c to 51c after announcing plans to restart the Sao Miguel Paulista nickel and copper refinery in Brazil, funded through a fully underwritten US$150 million capital raising.
  • Minerals 260 reported significant bedrock palladium and platinum intersections for the first time at its Moora exploration project in WA, adding 2c on the market to 36c.
  • Sheffield Resources added 1c to 53c after reporting that construction work at its Thunderbird mineral sands project in WA had passed the 50% mark, and
  • Alicanto Minerals rose by 2.3c (64%) to 5.9c after reporting visual sulphide mineralisation while drilling the Skyttgruvan-Naverberg target at its Greater Falun project in Sweden which is showing geological similarities to the historic and nearby Falun mine, once one of Europe’s major sources of copper, gold, zinc, lead and silver.