Weekly TLT

Since the best contrary intermarket indicator of the share price underperformance of GBN.V is the iShares Lehman 20+ Long Bond ETF price, then it might be a good idea to have a quick look.

Any correction in the TLT will very likely lead to a price correction to the 89-week EMA, as this particular asset has declined every time to this price point since 2008. The last two corrections ran 23 or 25 weeks, which would put the bottom of this correction in price at the end of April.

Very likely the TLT will have already topped out a few weeks ago, though there seems to be very insistent and aggressive buying at this point. Volume has dropped significantly overall on the weekly chart. Bear in mind though that the entire float gets turned over in a week's time, meaning hundreds of millions of dollars is exchanged or perhaps into the billions for this one particular ETF.

Not suprisingly, GBN.V shares are trading at their lows while the TLT surges. Personally, I'm very tempted to sell my GBN.V shares and buy TBT. The people actually selling their shares into this bear market low are probably hurting very badly in terms of losing money or finally getting crushed under the weight of their own leverage and selling into a panic. Mostly what I'm seeing is people selling directly without buying any shares whatsoever.

Higher highs and higher lows in something like TLT indicates a continued rise in the average bond price and chronically low yields, but this does not preclude a correction.

supersize: http://www.flickr.com/photos/11747277@N07/6399828845/sizes/l/in/photostream/

stockcharts.com

GBN.V Weekly

Without any further guidance from the company this stock has a major red flag hanging over it since the last few years, which is share dilution or reverse split. The permitting issue is bigger overall, but the overhang has to be the irresponsible management of the float. (I would add secretiveness as well.)

When the company is very anxious for new capital, they go out of their way to advertise the latest development, but when financings aren't required, then key information necessary to the shareholders to determine the value here for investment is not forthcoming.

Operational details such as grade, processing rate, rates of recovery, average realized price for Q2 fiscal 2012 are basically a guessing game and go unreported.

What will happen here is that a buyer will come along and offer a cheap takeout of the stock. The stock is so undervalued, that a hostile bidder is risk free in buying the project.

A venture capitalist can take out the stock and take it private, only to IPO later. Cheap takeouts have happened to all of the struggling gold mining juniors and even the not-so-struggling ones such as Aurelian. For GBN.V board members, that means a life's work in assembling the La Ronge Gold Project gets washed down the tubes.

A cheap hostile bid is the most likely outcome, unless overwhelming free cash flow is announced and dividends are paid out.

What other scenario could possibly advance the GBN.V share price? Obviously, a higher gold price, which we would probably see in the new year. That begs the question of what psychological level must be attained in the gold price before the light bulb goes on in investors' minds.

On the sell-side, a great deal of effort is being expended to obtain a temporary paint of the tape @~25¢. It will take a monstrous effort to decline the price further than this. Throwing aside all unethical considerations, the market is attempting to price in a 1P/E.

supersize: http://www.flickr.com/photos/11747277@N07/6399909989/sizes/l/in/photostream/

stockcharts.com

Auriga

An IPO of a new gold company, probably a spin-off of assets, is Auriga gold. Their presentation has some interesting maps and they list certain comparables, such as GBN.V. The maps show the border region with Manitoba and Saskatchewan, and some of the mines along this route. They also just announced a PEA.

http://www.aurigagold.ca/s/news.asp?ReportID=487847

http://www.aurigagold.ca/i/pdf/CorpPresentation.pdf

What If There Were A Parabolic Rise In Gold Prices?

With Richard Russel saying that the gold price parabolic blow-off is still set to occur, I have to admit that I am more and more in agreement with the inflationist point of view. However, it must be said that even if the gold price obtains the ~$7000/oz. mark, and the Dow decline to 7000 points, then this would not measurably change the outcome of the average price, or the stock market, or commodities.

This would probably not change the inflation-adjusted charts since yr. 2000, either.

That's because a drastic decline in the purchasing power of commodity assets is a monetary crisis, and does not necessarily change the outcome. In a wildly fluctuating forex market, the outcome is impossible to quantify.

If the outcome is an average gold price of say, ~$2500/oz. once all is said and done, then this fits exactly with my own assumptions. It could be as much as $3500/oz., average which is doubly ironic, because this is 100X the depression era value, after the devaluation of the U.S. dollar from $20.32/oz. to $35/oz.

Interview with James Turk

Fraser Institute Assessment Of Economic Freedom

http://news.nationalpost.com/2011/11/22/alberta-scores-top-spot-in-economic-freedom-report/