Safe Haven - John Ing

Rather I should say that GBN.V is one of the very few profitable mining companies in the junior gold sector, with no exaggeration.

One thing John Ing misses completely is the onset of IFRS accounting rules and the repudiation of GAAP. This is an important step and change that makes mining companies compliant with risk-cartel demands. Thus dividend yields become very important in the calculation of dynamic hedging and the adjustment of risk in massively leveraged long term positions.

This makes costs appear to double, as you would be providing the cost of operations for the quarter, and that of the next quarter, compounding costs. Costs really haven't changed, unless you are mining low grade ore and including almost all of your development muck in the process.

Quote:

"Show Them the Money

To close the gap then, we believe that the gold industry should pay out higher dividends and make a higher prioritization of yield, raise yields and share the higher gold price with their shareholders."

http://www.safehaven.com/article/24964/gold-the-big-lie

Take a very long, hard look at the following chart. Gold mining equities have underperformed so badly and for so long, as to be a major embarassment for the gold mining boosters like Sprott. Year after year we've heard the same hopeful, boosting story, that gold mining companies will explode to the upside.

Ok, so when, if at all? I would reply that the share price appreciation model has been thoroughly castrated by dynamic hedging strategies held over these stocks, which goes completely unrecognized by the miners themselves(thus the dilution of the shares) and their pump and dump boosters. TAKE A VERY HARD, LONG LOOK AT THE FOLLOWING CHART.

In the absence of any buyers, the sellers are in control. But with gold price appreciation, gold miners are the source of bullion, like it or not. Your gold mining stock might have risen, but unless its a bubble stock, then it will have thoroughly lagged bullion prices.

If you have a stockcharts.com account, divide the GBN.V share price by $gold for a surprise result:

supersize: http://www.flickr.com/photos/11747277@N07/7048670257/sizes/l/in/photostream/

stockcharts.com

-F6