Dexia Says It May Go Bankrupt

Dexia's exposure to debt is as large as Greece's debt, according the AFP. Record losses after Greece bond haircut. Feels like Lehman being hung out to dry.

A change in the wind like this will directly affect bond prices in the U.S. treasury markets, which have already reacted with higher bids in the 7-year bond markets.

Since GBN.V trades with strong inverse correlation to the long-dated treasury market, and the short positions are very large in long dated treasury ETFs, a short squeeze of epic proportions may occur in the bond price. This will greatly advantage the sell side broker in GBN.V share prices.

This leaves GBN.V investors out of luck in the short term, and the company without recourse as to the valuation of the company. GBN.V is trading at its asset value with no value to its reserves in the ground or its properties. GBN.V as an equity will be affected by a short squeeze in treasuries and a massive sell-off in equities.

The strategy should be to pay out a dividend, and to promote its healthy balance sheet, and to put aside plans for massive open pit mines until the first 10 years of operations is done and the company can make the step.

Otherwise, the company is shooting itself in the foot by inviting a hostile takeover at the same time as destroying the investment case for the company by piling on the developmental deficit.

The Gold price will support an emerging economic of dividend paying gold mines, which was their traditional role during the depression era.

Reuters