Capitulation & Denoument

What we are seeing in the stock is a very typical capitulation followed by denoument. That the company decided to dilute the float further probably spooked the entrants who came in buying cheap shares during the share price crash, after the announcement on Feb. 18. The stock price declined from 55¢ to ~40¢.

Normally a major development and expansion of production would excite the players. Anybody anticipating this move would be strongly optimistic of the outlook and welcome the low share price. But the effect of one insider buying on the eve of the expansion of the float affects the the shareholders as if they were being swindled. So the share price crashed in a panic. This was also helped along by the market rout.

Now, my position is that the market will take over here. Whatever the need to cover up material information that would instead be required in order to boost confidence, the market will take over when anybody engaged in financial risk assets tied to the decline in the GBN.V share price are faced with massive liquidation.

My theory on that is that no matter how much you try to lay on the financial risk, the eventuality is that the impending decline of the discount rate into the negative, add this to the increase of volatility and the rise in the gold price, those traders who have so far held off in settling their account by buying into the shares will be forced to settle. There is no other choice, imo.

Perhaps a further deterioration of the nuclear crisis in Japan, or still yet more war in the Middle East will be seen as the cause. But the market has been working towards this end for over two years. Thus GBN.V is vulnerable to a melt-up, as is the Japanese Yen, or the bullion price. And there is by far more interest(or should we say disinterest) in destroying the gold miners and demonetizing gold than there is interest in preventing a Yen melt-up. This list of usual suspects has been under duress by the commercial banking sector for decades.

A discussion of transition points like these is available here:

http://talkdigitalnetwork.com/2011/03/transition-period/

How much do you know about GBN.V? What size is the high grade portion or strike length of the Roy Lloyd mine? What is the head grade at the mill? Why was bulk sampling not reported? Why is there no historical information on the La Ronge gold showings available on the GBN.V website when there's an abundance of governmental information on the web? For what reason is the mill zone being ignored, or the former Star Lake Mine? How old are the diagrams of the Bingo deposit and feasibility studies, and why haven't any been updated? How long have they had a million ounces on the books? (hint: since before yr. 2000, more than 10 years ago.)

Imo, company directors took on financial risk assets to protect against loss in 2006 - 2007, as they became available in Canada with further financial deregulation. This doesn't necessarily mean they're short their own company, but the company certainly seems to defer to the bond holders interests far more than the shareholders' interest.

Let's hope these guys lose their shirts, because derivatives were only made for one thing: To lose one's money.

supersize: http://www.flickr.com/photos/11747277@N07/5541190276/sizes/l/in/photostream/

stockcharts.com

Golden Band Mentioned In Article

"TGR: Do you think of these producers you're following as value stories or growth stories?

MZ: Currently, I think they're a bit of both. They are value stories because investors haven't really factored in the current prices of the commodities. In my models to value companies I'm using a $1,000/oz. long-term gold price to be conservative. And for silver I'm using something under $20/oz., which is considerably lower than the spot price. I think investors are doing the same thing. They have seen a move up in the price of gold and silver over the last few years, and they're still basing their valuations on much lower gold and silver prices. For that reason, they look like value propositions. Furthermore, when you buy gold or silver equities you are buying resources that will end up as future production for a fraction of the current spot value—currently this is around $130/oz. of gold resource for a junior gold producer, for example.

These companies also look like growth stories. The junior producers typically have not spent a lot of money to explore their properties, and so a lot of them have considerable exploration upside that they just haven't been able to focus on. Also, when these companies start making money, you will see a lot more M&A activity as smaller producers combine to reach that mid-cap status and begin to achieve a higher valuation on the basis of being larger and more stable companies. These companies also typically have a lot of room to grow production organically. So, I see it as both value and growth.

TGR: What are some examples in the gold sector?

MZ: Here at Northern Securities, we focus on a lot of small-cap explorers and producers. Some examples where we've been involved in recent financings include NioGold Mining Corp. (TSX.V:NOX; OTC:NOXGF.pk), Armistice Resources Corp. (TSX:AZ) and currently we are working on the financing for a company called Golden Band Resources (TSX.V:GBN) in Saskatchewan. A couple others that include base metals and precious metals are Canadian Zinc Corporation (TSX:CZN) and Buchans Minerals Corp. (TSX.V:BMC). "

http://www.marketoracle.co.uk/Article26813.html

Americans Eying Small Cap Producers

"Shares of Claude Resources Inc. (CGR) saw unusually high trading volume on Thursday. Approximately 655,922 shares changed hands during mid-day trading, an increase of 0.99% from the previous session. The stock last traded at $2.49.

On a related note, analysts at Zacks Investment Research reiterated a “neutral” rating on shares of Claude Resources Inc. in a research note to investors on Wednesday, March 2nd."

source: American Banking News

CRJ.TO shares have roughly followed the $CDN trend. Note: One more fundamental that nobody counted on to improve the fortunes of CDN gold companies.

stockcharts.com

Wall Street Journal

Canada Bonds Extend Rally Amid Japan Nuclear Worries

N.B. Oop. Throw another fundamental on the pile favouring a meltup in GBN.V shares. If the traders laying on financial risk assets are exposed to a decline of Canadian bond rates, especially at the short end of the curve, well, then kaboom.

http://online.wsj.com/article/BT-CO-20110316-714034.html

BNN.CA

Interview with Jim Grant:

http://www.bnn.ca/News/2011/3/16/Fundamental-problems-with-investing-in-Japan-Grant.aspx

Frank Mcghee on Gold Prices:

http://www.bnn.ca/News/2011/3/16/The-future-of-gold.aspx

Junior Merger