via McClellan Financial Publications

Since there are no buyers for GBN.V stock, and that a large investor had recently sold the rest of their position, the stock price is prey to delta hedging strategies taking money coming into the stock and parrying it against the rising trend in long-dated U.S. treasury bonds.

The evidence I point to is the short position in GBN.V which Bloomberg had correct, that 65% of the float is held short for the purposes of an equity swap. We also have very strong corroboration in the fact that GBN.V stock prices are -.83 correlated with the U.S. treasury price.

Not only that, but we have seen GBN.V financial reports on the web hacked by the sell-side enthusiasts, once the company started turning a profit. Since that time, however despite having profitable operations, being able to finance expansion and at the same time drum up a buyer for the gold, and showing results on the Komis property that this too is set to expand, the share price continued to decline.

Safe to assume then, that GBN.V share prices will only rise on a decline in treasury prices. Likely the equity swap holders are looking for a buyer to assume all of the project risk and settle their sell-side bet for them. What we have wound up with is a gold producing company trading below its asset price in a bull market in gold, probably able to pay for its own growth out of growth in the gold price.

So a decline in treasury bond prices need be in the cards before GBN.V shares rise. Along with the troubles in Europe and Operation Twist, and also failed, massive interest rate bets, treasury prices have been robust. Once the short-covering panic subsides, treasury prices will have to come off.

The following article shows that COT reports have mostly commercial bets overwhelmingly on the short side in treasuries since June 1.

http://www.mcoscillator.com/learning_center/weekly_chart/full-on_panic_into_t-bonds/

-F6