Midweek

I won't have time this week to post something for the weekend so this comes up a little early. I had watched Margin Call yesterday evening. I would recommend watching this film, since the banks are not all powerful, and they respond to lopsided risks to their balance sheet immediately.

This is how they will respond to their asymetric risk in long term and chronic naked shorting of gold mining shares since Bre-X. Of course, as I have demonstrated, the bond markets will have to sell off first before we see that.

Resolute Funds must have been appraised of this inverse correlation, since they sold off a big chunk of their holdings of GBN.V into the rising price trend last year, with no real ill effect, since the technical aspect of the chart lived up to its target price.

GBN.V has not been anxious to relate their production details in the meanwhile. On the one hand, this is keeping important information from the shareholders, but on the other, they definitely don't want you to lend them any more of your money.

A company that's been in business for twenty years, and sees the shareholders as their lowest priority when it comes to providing returns, or even keeping them well informed, is probably in for a hostile bid. The poor optics of not having provided returns in that time has led to a de-listing from the S&P Preferred Shares List.

I'm not against the S&P Preferred Shares List delisting, since it shows this company is chronically in default to its primary lender, the shareholders. As a transparent move by the banks to destroy confidence in the stock, it did little, in fact to affect the share price. Its also a dead giveaway that the banks are very serious about employing the nuclear option against the stock.

But there is a way out for this company. In fact, they can actually pay dividends. They can't both keep secrets from the shareholders and ignore their responsibility to provide a return indefinitely.

Time's up.

supersize: http://www.flickr.com/photos/11747277@N07/6719414537/sizes/l/in/photostream/

stockcharts.com

GBN.V Daily

The quiet trading in GBN.V stock when american markets are closed is a dead giveaway that the trade in the stock is tied to american markets, that monies from share purchases are being employed elsewhere. The onset of quiet trading is a sign that commercial traders are deeply uncertain of the direction in the markets.

But its not a given that bond markets will necessarily sell off, since central bank purchases of government bonds will keep interest rates low indefinitely.

So, of course the problem of providing a return to shareholders is becoming a very real hurdle for this company.

Since the Point & Figure charts from Jan. 10 is showing a breakout to ~36¢, and the stock is trading below its 300-day MA, this will probably be the next move, if at all.

If you throw aside all of the intermarket considerations, such as selling the miner and buying the long bond, then you can say that the market is assigning a value to the stock, perhaps 1P/E.

This would imply a higher processing rate, perhaps in the range of 90 - 100k oz. per year, if you take an average gold price of ~$1800/oz. U.S., or a $20m. profit (net and comprehensive earnings) for Q3 or, if not, the end of Q4, and costs remained the same.

supersize: http://www.flickr.com/photos/11747277@N07/6719452359/sizes/l/in/photostream/

stockcharts.com

National Post

Barrett found making use of customer's funds to prop up losing bets:

"Canada’s investment industry watchdog is accusing a small Toronto commodities brokerage of manipulating client accounts and issuing false statements as part of what it alleges is an “elaborate trade allocation scheme” that went undetected for years and that now leaves customers “at immense risk of harm."

Financial Post Story

Central Banks Increase Gold Lending

Financial Times

Dollar Funding And Negative Lease Rates In Gold

http://ftalphaville.ft.com/blog/2012/01/13/831971/goldman-on-metal-pawning/

How A Transparent Non-IFRS Financial Report Looks Like

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aARZ-1917419&symbol=ARZ&region=C

-F6