We Are In A Bear Market

• The primary reason why I suggest the company pay out its net and comprehensive earnings in the form of dividends, is that we are in a bear market for equities. That we cannot expect share prices to rise in a bear market, thus returns must come through payouts.
• The second reason is that delta hedging strategies based on Black Scholes option pricing models will have to anticipate forward earnings. Thus if the company paid dividends, this would introduce significant price arbitrage risk.
• The third reason why the company might want to pay out dividends is the significant and growing risk that a hostile takeover in the market will occur, to nobody's satisfaction. They desire exclusive minority and managerial control over the La Ronge Gold Project and can only keep it that way if they share the proceeds with the majority owners of the company, the shareholders.

Not only are we in a bear market for equities, but in nothing less than a massive deflationary credit collapse.

The following chart attests to the onset of an economic decline. There is no doubt about this issue.

All of the propaganda about economic recovery is complete, utter nonsense. But the pundits pounding the table about share price recoveries in equities may have it totally wrong. P/E ratios will be very important going forward. Average P/E ratios for the TSX is 15. This should be cut by half.

Earnings are set to decline across the board, especially in mining, unless you are primarily mining gold.

http://blogs.stockcharts.com/canada/2012/05/baltic-dry-index-not-exactly-mouthwatering.html

$Gold Monthly

Gold prices are conforming within the rules of an elliot wave count, and according to a fibonnaci regression. What that means is the disqualification of a couple of really important forecasts for the gold price.

The fractal progression, and Alf Field's elliot wave count. The fractal progression relied on each wave progression being proportionally the same as the last, which hasn't occurred. Alf Fields' elliot wave progression is a 3-wave extension, which immediately disqualifies it as valid, since this latest correction/consolidation in gold has turned out to be a major correction.

Sharelynx eWave projection is a 5-wave extension:

http://sharelynx.com/chartstemp/GoldeWave.php

Reaterm's Dax In Gold is a cyclical projection, giving the same duration for the gold bull, but not the same price outlook:

http://realterm.de/DAXinGold.php

The way they can be both correct is if the U.S. dollar collapses to a tenth of its value.

The two reasons I can see for the supremely sluggish May in gold prices are as follows:

• We had a major moving average crossover of the 13-week EMA and the 34-week EMA on the weekly chart.
• The UK central bank has been chronically and surreptitiously intervening in the market to defend the £1000/oz. price level.

supersize: http://www.flickr.com/photos/11747277@N07/7314123586/sizes/l/in/photostream/

stockcharts.com

-F6