GDXJ Daily

There's been a hooplah about 'the start of the bull market' in gold mining shares. If my analysis of the INDU is correct, there will be no bull market in equities of any kind for some time to come.

Then there wouldn't be any lending of any sort going on should a concommittant bear market both in equities and treasuries commence. Considering GBN.V moves at drastically curtailing production on gold price corrections and trying to pull the wool over lender's eyes with the intention of operating at a loss, that bridge has been thoroughly burned.

Junior gold miners as a whole will likely be forced to pay for everything out of pocket. This is entirely possible for GBN.V, since a rate of full production would throw off overwhelming free cash flow, enough to pay for share buybacks, and even pay for a mill without any sort of financing.

The company is in a position to produce 75k oz. per year, with its stockpiles and active mines indefinitely. With the addition of Golden Heart, they will be in a position to produce ~100k. oz. per year.

http://scharts.co/X33xet

GBN.V vs. $Gold Monthly

I enlarged the following chart since I am no longer posting them as images via flickr.

Share prices would have to appreciate 15 - 20X to catch up with the 200-month moving average in green. Should gold prices move to new highs, then share prices would have to appreciate 100X to catch up.

The parabolic move to the downside is very apparent, and unprecedented historic lows are in evidence.

http://scharts.co/YaQ57o

-F6