Gold Mining Blackout

With the latest correction in gold still labouring on, the $CDN gold price is retreating. The bull market will resume at some point. imo, the complete blackout in gold mining shares is bound to hit a snag should the gold price rise.

This is because derivatives that use Black-Scholes option pricing models to naked short sell mining shares and buy treasuries options will have to unwind those heavily leveraged positions.

Miners can always provide dividends, which force the options pricing models to account for forward earnings, thus a higher share price. GBN.V should be showing overwhelming free cash flow, but Netolitzky is desperate to maintain minority shareholder and managerial control over all aspects, in the event a hostile bid should emerge.

Its completely preposterous to expect shareholders to believe that you produced some 30k. oz. and yielded over 50m. in the first year and not have any money left over. GBN.V is in the same boat as every other gold miner, making a litany of obvious mistakes in their anxiety while all it has to do with is the gold price should be higher.

Bloomberg

A sign of change would mostly come from the onset of demand for short term money, and declining yields at the short end of the curve. So far, during the gold price correction short term yields have been comparatively robust. Lease rates have not risen in the least, despite the surreptitous fat-finger sell-offs.

The lights will come back on once gold prices are robust enough to reflect gold prices adjusted for inflation using shadowstats from 1997 and earlier, that $400 back then is really now more like $1750 or better. This can be achieved in a day.

The gold miners are in a blackout, and are the last resort in the shadow banking tool box, hoping that if you affect the gold miners, the gold price will be affected.

This is no different than the Bre-X era.

-F6