Weekly GBN.V Chart

One chart that hasn't been posted in a very long time is the weekly GBN.V chart. If any chart demonstrates how well prior resistances have been overcome and how there is plenty of space for the stock to rally, its the weekly chart.

A close above pivot points going back 2.5 years. (horizontal line) Trade in the stock has been orderly on above average volume, and if I would describe what's going on is that with the breakout in gold prices to new highs, and the onset of money into the stock, long standing accounts having sold shares without first buying any are calmly going about their business cycling and recycling through price levels attempting to settle, without any real panic at the moment.

The discount rate in the U.S. actually rose during this rally, while the policy rate was raised again in Canada. A major decline of these interest rates, the discount rate in the U.S., and the money market rate in Canada will cause some urgency in these accounts.

Not at all sure what the company is fixing to do with issuing more shares. Certainly shares pricing at these levels will motivate warrants holders to cash in and hold more.

supersize: http://www.flickr.com/photos/11747277@N07/4999189801/sizes/l/in/photostream/

stockcharts.com

Money Market Rates

Sell side brokers, whose job it is to break the share price of small market cap companies will be looking at the rise in GBN.V share prices with some concern, while confident interest rates will keep going their way. Their margin accounts, which are 10X leveraged, depend greatly on interest rates keeping their distance from the fatal 0.5% interest rate.

The corporate rates, on which they depend rise and fall with this rate, meaning if treasury rates rise, then the spreads on borrowing between corporate rates and treasury rates make shorting GBN.V stock almost risk free, as long as the stock doesn't go up.

So basically, the stock will be under some selling pressure unless interest rates change in the next two weeks to a month. (it looks like a huge upside peak, so I would strongly suspect declines in short term yields.)

A discount rate decline in the U.S. will seal the fate of the larger sell side effort in the stock.

An additional difficulty for the sell-side based on either the money market rate or the discount rate will be the relentless rise in the gold price.

Treasury bill auction, average yield: 3 month Previous data
GRAPH PERIOD: 15 Sep 2009 - 14 Sep 2010	10 Aug 2010 --- 17 Aug 2010 0.70 24 Aug 2010 --- 31 Aug 2010 0.69 7 Sep 2010 --- 14 Sep 2010 0.92

source: http://www.bankofcanada.ca/en/rates/tbill.html

Weekly Analogous Chart

The Weekly chart in Gold is allowing us to follow analogies in past moves, which may be set to repeat in the next few months. The pending move in Gold may be very much like the move in 2005 - 2006, from $410.40/oz. U.S. to $730.40/oz. U.S., possibly giving us a springtime midway point for 2011 of $1859.55/oz. U.S., if $1044.80 is the same analogous starting point.

Of course, moves in the gold market will be much more volatile on this upleg than in 2005, simply because traders have discovered the price arbitrage between the am fix and the pm fix.

supersize: http://www.flickr.com/photos/11747277@N07/4999308897/sizes/l/in/photostream/

stockcharts.com

Buying Geology, But Discussing The Top Of The Market

BNN.ca

http://watch.bnn.ca/thursday/#clip347930

-F6