Regulatory Hurdles

Its very clear that in Canada, its impossible to have a startup mining company without facing serious regulatory hurdles along the way. I believe this is the main problem with GBN.V. But for shareholders, obtaining any information on the federal process is like pulling teeth. Once the regulatory hurdles are over with, the companies' various other shortcomings have to be dealt with in order, but it would really depend on the intended goal.

Now, a gold mining company that requires a bank to finance its production is clearly inviting failure. That they are unable to self-finance in the midst of an historic run on the gold market invites skepticism. The management at GBN.V have gone out of their way to minimize the production scenario, when there is probably no way of exaggerating the underground concept. My question is how they go from a serious production scenario to one that looks like a make-work project. This following production scenario sounds real, not the proposed 400tpd make work project.

http://www.saskmining.ca/uploads/news_files/37/golden-band-minexploexpo-gbn-sept08.pdf

Thus they would require a larger investor keen on developing the gold company in growth mode with a serious intent of providing dividends for shareholders. Not just to establish production, but with a clear goal of paying dividends. This should be the outcome of any mining project, that shareholders benefit, not the banks. But it would require a serious player from the investment class to intervene, buying a controlling interest and providing the necessary startup capital. Otherwise, this gold mining company is a hapless land-flip, and that's all it is.

What does this company have that its not publicly saying?

1. Targets lined up.

2. An end to regulatory hurdles.

3. Long lived underground mining scenario.

4. The technical reports should state clearly and accurately that they have deposits identical to smaller ones in Timmins and Val D'or.

5. That they will have several mines under development simultaneously.

What is the company missing?

1. A reverse split of the shares.

2. A second jaw crusher.

3. A major investor/developer.

What fundamentals are going unrecognized here?

1. Investing in GBN.V is fundamentally a bear trade on the financial sector.

2. A player could put the ball into the management's court and they will be left unprepared. (this would not be bad for GBN.V shareholders, but you can forget getting paid dividends.)

Weekly Analogous Gold Chart

The gold price is now very near to the target value of ~$1251/$USoz., probably reaching it in the next week, after which some sideways trade should be in order. We'll have endless recriminations of manipulation in the gold markets, but the target value of the flag formation is also very close, so the rally should see a slacking off next week, or the one after.

Stockcharts.com

Japanese Yen

Some people might wonder what the Japanese Yen has to do with anything, but its appreciation over several years, more than doubling its value since 2002 is a major deflationary force in the world economy. Some disintermediation of world currencies should occur as interest rate regimes change once again. I believe an eventual decline of the Yen vs. the $US will support gold prices should the dollar rally hard. You can see that the Yen is at very long term breakout levels, but also the historic movement of the Yen during the '90's could be mimicked in the dollar:

Stockcharts.com

A Chart We Haven't Seen In A Long Time

The $CDN dollar gold chart is testing the high, and may breakout with a decline in the loonie, though it has a gap to fill:

Stockcharts.com

Silver/Gold Ratio

The Silver/Gold ratio peaked a couple of weeks ago, despite the wildly aggressive run on silver prices. The headline from last week stated: 'Traders panic into the dollar and out of risky assets like gold.' I prefer to think it more looks like this: 'Traders panic into the Yen and held onto their risky assets like copper.' I've been waiting for a key reversal in the silver/gold ratio, but the uptrend has been so jagged, that making sense here has been all but impossible. Just the same, it may live up to its reputation as an indicator of changes in credit markets.

Stockcharts.com

Weekly GBN.V Chart

Should the 13-week EMA cross the 89-week EMA, we have a major technical signal that the rally will resume. We can still anticipate a double bottom at this point, because unless the company manages to clear some of the overhead, then a bear cartel in naked shorting the stock will take it down again.


Stockcharts.com

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