$CDNX Monthly - We Are In A Bear Market

The $CDNX Monthly chart is the best representation of the markets as regards the miners. A beautifully expressed five-wave progression in elliot wave terms marks the bubble in small cap stocks in all sectors, including the miners.

That bubble has since blown out with the high in 2007. Yet people still anxiously believe that share price appreciation will somehow be visited on them since we're presumably in a bull market.

Not to be a wet blanket with the intention of discouraging anyone, this is a howling, screaming bear market. With poop. But you don't see the terms 'bear' and 'market' put together anywhere, especially with newsletter writers promising 10-banger gains.

This chart is saying the bubble in mining stocks occurred 5 years ago, where ppl. favoured the miners over the metal, but now are favouring the metal over the miners, if you take your indication from the coppper price compared with the CDNX. The highs in GBN.V share price correspond with the highs in the indece.

The most notable statistic lately about GBN.V is its increasingly strong inverse correlation with 30-year Treasury Bond prices in the U.S. Even more crazy is the short position as stated by Bloomberg. Likely GBN.V is looked upon as a failed miner with no assets and no money to continue operations, so its share price has become part of an indexed delta hedging strategy tied to the CDNX, which might explain the massive short position of ~1100% of the float.

We have commercial traders buying and selling GBN.V shares to themselves in a clownish attempt to create a panic, when it has all but played out months ago. They believe they can set the price. For their efforts on Friday, they got 1¢ on the day and a close of 1/2¢. Anyone engaging in this type of trading is not cut out for the markets. But they might not be wrong in this, since the CDNX is set for a major crash in value.

A buying op should materialize out of thin air should the gold price advance and break out finally in Canadian dollar terms. Very likely declines in commodity prices (commodities are not seperated from the miners) will be accompanied by declines in the Canadian dollar. This will benefit gold miners as their costs drop in terms of U.S. dollars temporarily. Gold should retain its value in any currency.

Gold may the exception to the rule against the declines, but GBN.V as a company traded on the CDNX had better have a far superior plan than getting sidetracked into a JV with Masuparia, such as paying dividends.

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-F6