$Gold Daily

The daily gold chart shows cross-overs of the 200-day and 300-day moving averages, which is a further confirmation that the latest correction in gold prices is a major one for the bullion market.

In mining shares, this crossover has turned into a major rout of share prices, while in gold it meant a lenghty period of neutral trade.

The average realized gold price since commercial production was declared, in April 2011 is probably around $1630/oz. U.S. Very likely the same results have been obtained for production since the beginning of fiscal 2013.

http://www.flickr.com/photos/11747277@N07/7761886890/sizes/l/in/photostream/

http://scharts.co/R1Xis7

via Seeking Alpha - Rothbard's Gold Price

The following article researches Murray Rothbard's calculations on what the gold price should be based on measuring the liabilities at the Fed against ounces held in the treasury:

"If we divide the liabilities of $2.87 trillion by the 260 million ounces we obtain a new price of gold of $11,030/oz. Back in 1994 the "Rothbard price" of $1,555/oz was a factor of 4.3 times higher than the market price of $365/oz. Today's Rothbard price of $11,030/oz is a factor of 6.9 times higher than the market price of $1,600/oz. For the factor to fall to 4.3 again gold's price would have to rise to $2,600/oz.

A gold price over the next couple of years in the vicinity of $2,600 and higher is certainly possible, especially when you keep the macroeconomic fundamentals in mind."

What I find very curiously interesting is that a gold price in 1994 of ~$2600/oz. U.S. translates into ~$11,787.53 using shadowstats. Tom's Inflation Calculator has an option to calculate the price outcome of an historical price in present day terms using shadowstats. It's uncanny how precisely this calculation conforms with the present day liabilities at the Fed divided by gold held in the U.S. treasury, as calculated in the article.

http://seekingalpha.com/article/797791-rothbard-s-gold-price-2-600-oz

GBN.V ̇ Weekly

The action this week does not reflect the major milestone of the Waterton deal and the possibility that Komis may have added 30% to its surface open pit scenario between Komis, Rhyolite, EP.

Before getting sidetracked too much on cost per ounce, a quick look through news releases in prior quarters shows that costs are at the basic guidance of ~$900/oz. cost per ounce of gold sold. But if you go through the details, such as adding cash from operations, and dividing by guidance of 45koz., you come up with a number of ~$671/oz. That means there is a small operational surplus. This is not cash flow.

This cash-on-hand is drawn down quarter over quarter as needed, which arrives @ the average of ~$922/oz. for the whole year. Cash draw-downs were seen in the previous quarter due to operational slowdowns.

This is not what you call cash flow. Cash flow is any money made over and above all-in costs, which are probably no different than the guidance of $900/oz. So what you get if you multiply guidance of 45koz. by $922/oz. is just a little over ~$40m. Multiply $1630/oz. by 45koz, you get ~$73m. Minus the ~$40m. costs, the result is $33m. Multiply by .65 (taxes are very heavy) you are left with ~$21m. net and comprehensive.

Once you divide the net outstanding shares, you are left with 7¢ per share earnings. P/E ratios are only calculated at the end of the year, so any P/E ratios we are seeing are probably not valid.

Considering that the Waterton deal is legitimate and the final audited financial statments are to be presented in two weeks, it's intensely puzzling why anyone on the sell-side would want to continually sell these shares into market.

supersize:

http://www.flickr.com/photos/11747277@N07/7762038942/sizes/l/in/photostream/

http://scharts.co/ObqN69

via Yahoo!

Considering that I have long theorized that equities are subject to equity swap derivative contracts, and that this causes price declines across asset classes as long as treasuries are rising, and that GBN.V shares are very strongly inversely correlated to the long-dated treasury bond price, then any news regarding a decline in treasury bond prices, or at least signficant bets on an imminent decline is very welcome:

"Nervous investors have herded into Treasury bonds on concerns over the Eurozone debt crisis and a sluggish U.S. economy. As a result, Treasuries are seen as one of the most overcrowded trades in the market." (so is the short position in GBN.V shares)

http://finance.yahoo.com/news/options-trading-explodes-bearish-treasury-180839995.html

via Bloomberg - Short Sellers With No Sense Of Reality

I find it more than passing strange that short sellers of Volkswagen shares that were in a massive short covering panic as Porsche bought shares unnanounced, that they would have the absolute gall to sue Porshe for damages because of their stupid wrong way bet.

Bloomberg News

via FTAlphaville - Dr. Faber Sees Australian Slowdown

Canada is in the same situation, declines in oil and base metals will impact industrial metals and energy commodities, but further declines in interest rates at the short end of the curve will support gold and gold mining.

In Canada, people with money left after the housing bubble bursts will be looking for yield first, and price appreciation second.

http://climateerinvest.blogspot.ch/2012/08/marc-faber-turns-his-gaze-of-doom-on.html

-F6