$USB Monthly

The monthly chart of 30-year treasury bond prices in the U.S. is probably the best proxy for explaining price declines in GBN.V. As a rule, you would sell the gold miner, and buy the treasury bond. Even if you didn't own any shares in the first place.

As long as the price in GBN.V shares continue to decline, nobody is the wiser.

The last reported number Bloomberg reported in the short position of GBN.V shares was a negative number. -74%. That means a huge negative carry of almost all of the publicly held float.

If an equity swap holding long term obligations to buy back shares in GBN.V formed the basis of a subordinated bond, or investment note with a monthly yield dependant on advancing treasury bond prices, then as long as GBN.V continued to decline, there would be no impetus for brokerages to buy back in, or requirement to settle.

What that also means is that if you wanted to hedge your gold miner sales with treasury bond futures, you would have to leverage up more and more, because there's simply less and less available cash coming in.

And so the share price declines until it can go no further.

http://scharts.co/YRwPBp

A Speculation That You Might Want To Consider.

Now, if Mr. Netolitzky would hold a subordinated bond or investment note with a principal valuation of say, $10 - 12m., then he would have material reason to withhold information, obfuscate the facts, fire everyone who disagrees with him, stockpile ore without processing it, take on tiny loans with a first ranking charge over all of the assets, require that people lie for him who subsequently resign, issue fundamentally useless technical reports to satisfy legal requirements, table preposterously absurd reserves even though you've spent tens of millions drilling and relentlessly testing, and essentially prevent any part of the investment case to come to fruition, then this explains the apparent conflict of interest.

It's not the first time that a managing director or principal of a company is short. Cornering the risk in your own company is a very common practise since it was all made legal. Because if you didn't do it, somebody else would. Of course, you would need for other people to act as principals in the company so as to avoid the appearance of conflict of interest. All good and proper. You wouldn't want to be accused of being a scheming, white-collar crook. Because said individual understands yield, which he ostensibly receives monthly, and does not want to lose his principal, the company will not flourish at all.

As a customer of TD Securities, you would provide all of the necessary details to the sell-side broker to be certain. Certainly Sprott has held shares in GBN.V since 1997, and has presumably only just written off their equity swap with them. But GBN.V is still not a part of anyone's precious metals equities portfolio, including Sprott's. Sprott certainly seems to want to get out of the way of the markets. Rick Rule's Quest Capital, which once owned a fair chunk has never accumulated any more shares since they sold years ago. And he's been pounding the table on gold mining shares. How absurd.

As a way of hedging your bet against your own gold mining company, you maintain a healthy interest in the company, perhaps equal in the amount of the principal deposit. By way of strange co-incidence, your position and that of Sprott are about the same size. You go halfzies with your buddies.

You do nothing until you're certain that the bet against your own company is a losing bet. Because if you're going to lose that much money, and a nice 4% yield to boot, you'll want to be certain that the company is positioned to revive itself.

All perfectly legal.

The one caveat is that bail-in procedures are now in place should TD Securities be on the hook for losses since the March budget. So it's looking like that principal can be lost.

So we wait for the markets to move.

Have a nice weekend.

-F6