Silver/Gold Ratio

One chart I haven't looked at in a long time is the silver/gold ratio. The theory is holding fast that the company shares should be differentiating from the silver/gold ratio which it had followed for years, if we were to make any advances against a declining market.

On the long term weekly chart in log scale, you can see this playing itself out. Technically speaking, silver lease rates continue to be much lower than gold bullion lease rates, thus silver will lag gold on important turns in the markets.

supersize: http://www.flickr.com/photos/11747277@N07/4589497524/sizes/o/

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The Daily Chart

There's probably no need to repeat the daily chart here, because the breakout is now quite official. What's working behind the scenes is a decline in short term interest rates, making the refinancing of speculative positions requiring margin more costly. In front of the market we have bullion defying a market decline, and in the shares of GBN.V, we have and end to a very lengthy period of naked short selling. The longs are well positioned, while the short interest in the stock, be it equity swaps, or actual naked short sells are literally gambling to a loss.

supersize: http://www.flickr.com/photos/11747277@N07/4588901887/sizes/o/

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Long Term Perspective

The following chart shows how the yield curve had steepened considerably in the last while, and the result will very likely be a flattening of the yield curve with lower rates in the long bond, while short term rates will be pegged very close to zero, or perhaps go into the negative yields.

Flickr won't let me keep an enormous chart of this size on their site, so the only recourse is for members of stockcharts.com to view this chart in its fullness:

supersize: http://www.flickr.com/photos/11747277@N07/4578339702/sizes/l/

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Conclusion: - there is much more to the La Ronge gold project than meets the eye, its as if its a closely guarded secret. But you can, with some due diligence, compare geology, deposit size, grades and possible longevity directly with the Seabee Mine (CRJ.TO) and with those in the Val D'or district.

The prognosis for the gold bullion market is that it will take its place in the money markets, as a way of storing value and backing assets on bank balance sheets, because we are in for a very lengthy period of extreme low interest rates.

Traders will be looking for a way to hedge against declines and look to advancing share prices on even the smallest companies, because they will be far and few between.

-F6