$USB Monthly

One of the reasons why I place so much emphasis on shorting activity in the stock, is because of the weird behaviour of both the management and in the market.

But I have concluded the following:

• For one, the management will continue to complete and partially report formerly un-announced drill programmes which could have been undertaken as many as four years ago, that information regarding deposits is not forthcoming to the shareholders, production numbers and capacity or changes to permitting, which would otherwise have been reported with any other publicly-listed gold company is withheld, that quarterly financial reports are opaque and real spending or profitable results obscured in the details, continue to borrow unnecessarily, and generally brush off any shareholder concerns since they want to maintain minority and managerial control over the La Ronge Gold Project. The last thing they want after all the work was put in is a hostile bid for the company. THEY DO NOT MAINTAIN A SHORT POSITION ON THEIR OWN SHARES.
• I presumed that the short position could be as much as 30% of the float, or half the ownership of the publicly listed shares, due to the strange, one-sided selling. Bloomberg's key statistics may have inadvertently exposed the extent to which the shares are "shorted"(really, bucket-shopped) using derivatives in dynamic hedging strategies, where monies coming in to GBN.V shares are parried against the rising trend in 30-year U.S. Treasuries, mostly on the futures market. To my surprise, this amount is listed in key statistics as a whopping 54% of the float.

How can you tell? Its not difficult. In aggregate, GBN.V shares continue to be strongly inversely correlated with the $USB price. And, as the $USB price advances, GBN.V will recede. Not all gold companies or mining companies per se are affected this way. But many are. Even the largest ones.

For GBN.V share prices to advance, treasuries will have to sell off.

supersize: http://www.flickr.com/photos/11747277@N07/7316360424/sizes/l/in/photostream/

stockcharts.com

-F6