TSX In A Bear Market

You would never notice it unless it were pointed out to you that the TSX is in a bear market and has been so for a year. Never mind that the CDNX is atrociously bearish in these markets. The TSX is on the cusp of a downward spiral that can't be stopped, and all hopes that we are in a market for great gains in equities must be set aside.

Small wonder that the LQD, the corporate bond yield ETF is doing so well, since equity price gains can't be had. So the equity listed on the TSX is being sold, and the ETFs, such as, the LQD is being bought. I would also attribute the sudden inverse correlation with the LQD as less than accidental, since the 'no-down-tick' rule was abolished in 2011. Now that a consortium of banks owns the TSX, that makes for a perfect scenario for price-fixing in any Canadian listed share. Now that derivatives are the basis for markets, it seems a certainty.

Now, during the depression era, gold mining prices were fixed by the brokerages. The gold miners were literally the over-priced 'tech darlings' of the era until 1929, and subsequently crashed to miserable levels.(mostly they did not live up to expectations of large discoveries)

Their share prices were then fixed at par, meaning the brokerages set the price. Gold miners were a terrible investment until people started hearing that they paid dividends and began to yield massive dividends with the devaluation. Only the largest miners gained during that era, since their share prices weren't fixed at par. But the smaller miners provided the yields.

In order for GBN.V to compete with the LQD, this company will have to pay out an extraordinary dividend, because likely you will not see any share price advance, owing to derivatives fixing the share price, and, as I believe, management legacy issues in GBN.V are deliberately sabotaging the investment case.

For some reason they are loathe to demonstrate that their costs under IFRS are only ~$670/oz., rather than $900/oz. guidance. Every other miner in the world is now reporting under IFRS, so why not them?

LQD yields ~4%. That means if GBN.V had as much margin as I had suspected, ~$1000/oz., then they would have to pay out at least 8.5¢ per share, if the share price were $1.70(10p/e). If their net and comprehensive income is as much as ~$48m. after costs, minus taxes that means ~11¢ per share left over. With the present low in @.17¢ per share, a 5% yield would mean 1¢.

supersize: http://www.flickr.com/photos/11747277@N07/7668610900/sizes/l/in/photostream/

http://scharts.co/Q081jW

-F6