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A couple of news items in mainstream media about gold miners with yesterday's gold price fixing scandal sell-off market manipulation communist centrally planned economy.

Very few, if any, realize the importance of the dynamic hedging strategies in place in all markets at all times. If massively leveraged dynamic hedging strategies are ultiimately as sucessful as the commercial risk cartel monopolies believe, then just about every economics theory to date is about as useful as tits on a bull.

What this has accomplished is that everything, stocks, commodities, any asset with a price is subject to these dynamic hedging strategies at all times. That means your stock, that means your housing asset price bubble, that means your bullion price. There is a mathematical theory at the center of the world economy patented by the risk cartels propped up by central bank money printing.

But what this has masked is currency depreciation mixed with higher than normal inflation. So if you are a gold miner with no real equity value, then your responsibility is to provide a yield since this is the only qualitative change you can make to favour your equity valuation. You will never be able to simply shrug off the risk cartels with anything less, unless all of the banks everywhere go bankrupt all at once.

The ONLY companies with the opportunity to pay a robust yield (one that can compete with inflation and currency depreciation) laid out for them are gold mining companies. So your income statement is about as important as the geology of the mine.

Having a profitable gold mine that can pay for their own operations and development without borrowing money or diluting the shares, or hedging their production will be the miners people want, because they are much closer to yielding a dividend.

GBN.V is one of the very few profitable gold mining companies.

BNN Business Morning

Discussion of the miners, with Kerry Smith. He mentions Brigus Gold, also CGA Mining. Brigus's numbers are very similar to GBN.V. Their year end numbers are out. My expectations for GBN.V is that their numbers will be similar:

http://markets.ft.com/Research/Markets/Tearsheets/Business-profile?s=BRD:TOR

http://watch.bnn.ca/#clip652336

BNN Commodities

Cost Of Revenue has not appreciably risen with GBN.V. Why? This is because their costs are fixed, and cash from operations does not change with cost of revenue, and is in line with the prior PEA. Changes occur with increased production rates. Grade controls are good, steady, despite heavy dilution. (20%)

Many mines are desperately trying to mine as much ore as possible and processing barren rock, with impossibly low or imaginary cut-off grades, or mining below their stated cut off grade.

Negative real interest rates discussed with Douglas Waterson, Faircourt Asset Management. Negative Real Rates are based on the short end of the yield curve, rather than long-dated treasuries. Rates are so far behind inflation at the short end of the curve, even a rise of several percentage points will not affect the economics for gold price appreciation.

http://watch.bnn.ca/#clip652340

-F6