End Of Quarter

With the end of the quarter, we're seeing a rally in all asset classes, and a small retreat in long dated treasuries.

You're already seeing this rally called end-of-quarter window dressing. I find it disturbing that all asset classes are settling on the end of quarter, rather than on options expiry. That means futures markets are now suborned to derivatives markets.

I think Don Coxe has it exactly when he says that the problem will come from the banks, since you have no way of knowing which bank is conducting fraudulent practise.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/6/27_Donald_Coxe.html

Considering that the manipulation of LIBOR is now turning into another financial scandal, gold should be popping. You would normally expect gold prices to rally on options expiry, but we are seeing that on the close of the quarter. But in terms of commodities, all commodities rose robustly, which was the reverse of what I was expecting.

Gold lease rates are a function of LIBOR, probably along with so many other asset classes. But dealing with interest rates as if they were a price level is fraudulent to say the least, because if you were allowed to trade interest rates as if they were a price, you could ostensibly sway the whole market. That means interest rate fixing, especially short term lending between banks is now a wide spread practise.

Gold lease rates have flatlined for months, while sell-offs in gold prices came surreptitiously. Lease rates should have climed during sell-off days. The buy-back at the end of the quarter suggests a quarterly settlement, which is on treasuries, which means interest rate derivatives.

http://www.bloomberg.com/video/minister-slams-banking-s-anything-goes-culture-rLLd73ODQOCRkSsep1V7KA.html

The Financial Post was complaining this morning in an article laden with references about how gold prices were not performing as they should:

http://business.financialpost.com/2012/06/29/auguries-treason-of-the-clerks/

So for GBN.V, whose management does not want to disclose production figures, obfuscates finances, does not develop reserves, or any salient detail of financial worth and would rather that these details are withheld in a bid to retain control over the company, fearing a hostile bid, the only recourse would be that treasuries must sell off precipitously before seeing an advance in the share price. It does happen, so I would not rule that out completely.

Conditions in the market should dictate that P/E ratios and dividend yields are the most closely watched financial indicators for producing gold companies. For a publicly traded company with finances in good order this should be the yardstick. But, as shareholders in a gold company that does not support its shareholders as the owners of the company, we are the total losers.

But today we learn that BGM.V is staking their personal reputations on grossly exaggerating their gold reserves. This is strongly reminicsent of Bre-X.

supersize: http://www.flickr.com/photos/11747277@N07/7468930798/sizes/l/in/photostream/

stockcharts.com

-F6