Welcome To The Golden Band Resources HUB On AGORACOM
Saskatchewan's SECRET Gold Mining Development.
Message: Charts & Comments
Cramer's Comments
Cramer was essentially saying Thursday last week that 'gold' would get whacked, and to put in a low bid. But what he might mean is that gold mining shares may actually get whacked, and to put in a stink bid.
GBN.V released news, so that means either the discount rate in the U.S. is to rise from here, or the gold market will see a decline. GBN.V have front-run such corrections before by releasing milestone news on major corrections in the markets. Note that the GBN.V news release did not appear in my online broker, so this news was intended to be ignored. What the news actually means is they have the money to go into production. Should that not cause the share price to appreciate? Not in this case.
I will annotate the daily chart to demonstrate the technical aspects next week, but for now, Cramer's right. Put in a stink bid.
Goldman Finally Gets It
Now Goldman Sachs finally gets it, that inflation is not necessarily in the cards, but that gold prices will appreciate along with declines in interest rates. The following is a snapshot from one of their reports, dated 11th August, 2010:
source: http://www.scribd.com/doc/35748775/Goldman-Gold
The implication here is that once Treasury Inflation-Protected Securities in the U.S. are yielding zero, then the gold price should climb further to reach ~$1783/oz. U.S. With the addition of quantitative easing in the U.S.,(which will be duplicated around the world) the gold price should eventually see a much higher average price by a very significant percentage.
Note that there is no conclusion that mining share prices will appreciate along with the gold price, because so far the markets have been in decline, and gold mining shares have fallen behind inflationary trends.
If you were to apply inflationary analysis with large mining shares, they would track along with the market, or slightly better in some cases, but for the most part, any investment in the mining sector has, by now has fallen well behind inflation. ROI here has been chimeric with the 2008 stock market crash.
http://dshort.com/charts/N225-SP500-deflation-series.html?N225-SP500-overlay-real-peaks
We are not at all in a bull market, thus any return that falls behind inflation engenders a loss.
The Company Should Not Gainsay Returns To The Investor
From the company website:
"in May of 2010, Ron was an integral part of Osisko Mining Corporation's acquisition of 77.28% interest in Brett Resources Inc., which was strongly endorsed by the shareholders. The acquisition represents a healthy ROI for Brett Resources shareholders. Ron continues to sit on Brett’s board of directors."
source:
http://www.goldenbandresources.com/html/corporate/management_directors/index.cfm
The likelihood that Osisko has not provided a conservative base case scenario for its mining operation, and that they gainsay grades like most everybody in the market is strong. So if Osisko shares decline due to full on deflation, and no buyout prospect from Goldcorp., then they will not be able to provide a yield, and the investment will provide no ROI.
Outside Influences In The Stock
Added to this, we have a controlling interest in the stock. Not that anybody owns enough stock out there to make the decisions. But I am certain that through a synthetic credit derivative called an equity swap, you are probably considered a bond holder and thus can read out the riot act, dictating when news is released. There would thus be very sincere sell-side interest in seeing the share price underperform in that scenario. Given that the volume is so much greater on days when the discount rate declines, and that GBN.V releases news on discount rate rises, I think this is what's occurring. But it might be a whole lot simpler than that. Now, I can only speculate as to who gives GBN.V its marching orders, but I would surmise that its Cameco. Cameco was the interested party in times when gold prices were firm in the La Ronge district in competition with Barrick. Cameco operated the Contact Lake mine and sold its interest in the La Ronge goldbelt to GBN.V for a 3% stake in the company. They still own a 3% stake in the company, though they are not listed anywhere as having any shares, or as an insider. They'll be topped up whenever the float expands, so they continue to own that portion of the company. However Cameco arrives at maintaining their exposure to the La Ronge, GBN.V is clearly operating as if it were a zombie corporation and taking its orders from elsewhere. Another thing not mentioned is the new CFO Mark Thiel is formerly from Centerra Resources. Centerra was spun off from Cameco in 2001. Go ahead and read his bio on the GBN.V website and see if there's any mention. None. They would like you to believe that the CFO merely sat on the board of some obscure mine in Mongolia. No. He's the controlling interest. So I am assuming that Centerra will become the buyout candidate for GBN.V. Mark Thiel has worked in various Cameco subsidiaries, so Cameco must view GBN.V as an operational subsidiary. Centerra will make a 'stink bid' for GBN.V by offering shares, not cash. So What Happens When Gold Peaks Out? The gold price may peak out at some point and decline, so miners had better be prepared to provide a yield. Now, this yield must be substantial, as in better than inflation, so the yield would have to be in the 15%-20% range, not ~1% as they do now. The Canadian gubmint printed 12% yoy in taxpayer dollars since 2002 to keep the banking sector in wingtips. An unheard of yield is highly possible should the gold price double from here. Otherwise, they will see share price depreciation against inflation should they continue to snap up prospects very cheaply, dilute the shareholder base, and go on wild, speculative binges like Kinross has. Look at the share price of Kinross, shareholders must be infernally frustrated with Tye Burt: http://finance.yahoo.com/q/bc?s=K.TO+Basic+Chart&t=1y That Kinross is going about snapping up properties and not building the dividend yield means that people think they're in a massive stock market bull, while they are actually in a massive historical bear market, looking for share price appreciation-style return on investment while they should actually be demanding robust yields. -F6
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