Gold Weekly Analogous

The gold weekly analogous chart shows that our analogy has already begun to fall apart, due to the aggressive upside price adjustment in the bullion. However, if a price correction occurs off the high during the week, then our analogy remains intact. Note that the 13-week EMA is close enough to the bottom of the candlestick chart that gold may continue to rise unimpeded having essentially touched base.

But if there is a volatile price movement in the next couple of weeks, then its certain that the 13-week EMA will be the support, and the analogy is essentially proven correct, that price movements in the 2005 - 2006 period correspond with the present movements.

That being said, its unlikely that price fixing of any sort will move the line of scrimmage enough to upend the bull market in gold.

source: http://www.flickr.com/photos/11747277@N07/5154482572/sizes/l/in/photostream/

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GBN.V Weekly Chart

The weekly log scale chart is the least derivative of the GBN.V charts. It demonstrates that we are indeed closing above the initial pivot point of 38¢, under heavy volume. Insider buying continues, though I would caution that every time this occurs, they are preparing to expand the float.

As I am looking at the weekly gold chart and drawing an analogy from the 2005 - 2006 period, there is also a pending analogy building in the present GBN.V chart prior to the breakout for the same period.

As far as results from the refurbishment and production status is concerned, I would presume that the company will continue to defer to the bondholder's interest. We won't see any news releases unless they feel certain that the discount rate in the U.S. will rise. This puts back the first gold pour announcement into early December.

Canadian traders in the equity swaps or leveraged sell-side brokers continue to wage war on the price rise in GBN.V stock, mostly due to the onset of the rise in short term interest rates in Canada. There must be an inverted yield curve in the corporate bond market, where you can borrow short and lend long for this to occur. An inverted yield curve is a sure sign of a bubble, Canadian housing has yet to deflate, and credit is widely available. Much of the money resulting from an expansion of the balance sheet is likely going directly into any price move of any sort, so we are basically back to where we were in 2008, prior to the bursting of the oil futures market-corner.

supersize: http://www.flickr.com/photos/11747277@N07/5153973243/sizes/l/in/photostream/

stockcharts.com

$IRX Daily

The $IRX, on which leveraged traders will likely depend that it will rise, has been in decline. A leveraged trade takes time to establish, and very probably the outcome forseen in any leveraged trade such as equity swaps derivatives are mainly based on the contingency that interest rates will rise. Long rates are in decline around the world pretty much overall. Though in some markets, money market rates have advanced precipitously, expanding the balance sheet. (Like in Canada or the Eurozone, or the UK)

The decline in the $IRX is likely to have a direct effect on the bullion price as well as gold-related equities. For the most part, the $IRX has remained above zero interest rates for over a year. They can go negative, much like bullion lease rates are chronically in the negative.

A decline of interest rates and a rise in bullion lease rates are a very bad outcome for leveraged sell side brokers, because this will result in a short squeeze. If Bernanke achieves his goal of preventing the onset of negative rates with inflationary policy, then a Japanese style deflation is in the cards. This will strongly devalue the U.S. currency.

A chronically underpriced Yen will continue to rise. AND the Canadian dollar will rise. This is one more fundamental to throw on the pile favouring Canadian gold miners. Much as gold mining is politically disparaged in a country well endowed with prominent gold belts, investors keen on preserving their capital will stumble upon small, undervalued gold miners. Golden Band Resources with its La Ronge Gold Belt Project is one such company.

The TIMING here is very critical at this point. Since the company is deferring to the bond holder's interest meaning leveraged sell side positions in equity swaps, or naked-shorting gambits, and will do anything to limit the upside which may be futile. GBN.V is subject to the same changes in the markets, and thus GBN.V will come under the same with changes in the $IRX.

We have the next few days to consider changes in the $IRX. The announcement of new Quantitative Easing following a democratic rout in the U.S. leaves us to see if political decisions have any salutary effect on this particularly important indece:

supersize: http://www.flickr.com/photos/11747277@N07/5154727684/sizes/l/in/photostream/

stockcharts.com

Show Me The Money

What are the forecasts for the foreign exchange, given the market conditions set out with the advent of QE II and how currencies will rate in coming years? There is one place you can go, and that is the Armstrong Economics series, with its pi-cycle forecasts:

http://www.scribd.com/doc/40437058/Show-Me-the-Money-10-15-2010

Brent Cook Doesn't Like Anything Much

BNN.CA

One of the top people in the mining speculator business has to be Brent Cook, and he doesn't like much. What do you think he would say about GBN.V?

http://watch.bnn.ca/monday#clip369649

Kilograms To Ounces

A 45k oz. per year project with a 400tpd. mill implies a 9g/t head grade through the mill. A head grade of 15g/t and a 1000tpd mill means 15kg per day production.

This is straight forward arithmetic which would provide you with an idea of how much money essentially we are talking about. But look at Goldcorp. They recently announced a dividend yield of 36¢ per share per year.

For GBN.V to pay this kind of dividend fully diluted, they would require to make around ~$300m per year. @1000tpd, and a head grade of 15g/t, and a gold price of ~$1673/oz. U.S. AND they would compete with Goldcorp on paying dividends in the same amount, 3¢ per share per month, 12¢ per share per quarter, or 36¢ per share per year.

Now, compare this with equity swap holders who are clinging to their fraudulent liens in the hopes that their counterparty coughs up when the risk management obligations change in price. But they would be paid a robust yield far exceeding that of any useless swap could possibly provide should GBN.V live up to grade controls.

Which is the best gamble, the equity swap with its paltry returns, or robust yields in a gold mine?

http://www.asknumbers.com/KilogramsToOuncesConversion.aspx

-F6