jberni says: 'I told you so'

J Berni explains why money is flowing into derivatives in low inteterest rate regimes as opposed to everything else, that it provides economies of scale for monies to take up residence in a money-printing scenario.

Monies flow into derivatives, but this means it saps purchasing power, and in the case of GBN.V shares destroys share value. GBN.V shares are trading far below the asset value with a P/E on trailing earnings of 11.

What that does in the context of junior minings stocks is that you are fighting a losing battle with derivatives as money flows into them. As the underlying asset, or leveraged derivative hedge expands, treasury prices rise, while mining stocks get unusually clobbered.

Gold prices should continue to rise in the negative real interest rates that result, and that means the internal rates of return on gold mining stocks should rise. And as gold prices rise parabolically, then internal rates of return rise parabolically. Thus you would provide a return through dividends, as opposed to share price appreciation.

Here's Jorn Berni!!!

http://youtu.be/sBCvQCS8UBI

-F6