Stockhouse Is Verklempt

In an irrational move, Stockhouse has obliterated their bullboards. They have also removed all of the comments from 'Washer,' a sell-side broker that liked to gloat over stock price declines from the GBN.V board.

I expect that Stockhouse, because it never removes the worst unproductive and irrational comments from sell-side brokers and is taking money to keep those people active, that it shows how Washer was being too frank in the discussion by calling the prices before they occurred.

They did, however keep those comments complaining about stock scammers, and how people were swindled.

http://www.stockhouse.com/companies/bullboard/v.gbn/golden-band-resources-inc

DUST Weekly

From the appearance of DUST, the 3X short sell ETF on gold miners, you would say that it was all over for the mining sector. Much has been said about inflation of costs and that gold miners can no longer produce gold for the market price and make a profit. These numbers are grossly exaggerated.

I was curious to see how options were priced, in the eventuality that DUST collapses. Not only is there very little open interest in DUST options, but the prices are higher than GBN.V share prices 3 months out.

DUST saw a new high on a parabolic rise, and I'm wondering if gold mining indeces will not see a new low.

http://finance.yahoo.com/q/os?s=DUST&m=2013-09

The Long Strangle

Netolitzky has laid his cards on the table, and is short his own shares, as snugly as a turd in a dead cat. But he has also hedged his bet by taking a large insider position. In order to reduce risk in any options strategy, you take both long and short positions.

The name for the strategy is called: The Long Strangle.

It surely has felt like a long strangle, given the circumstances. Take a good look at the chart, this will show you how a Long Strangle is forecast:

The left side is the decline. Then there is a flat period for a time, then you have a considerable resolution once the strangle is completed. At the bottom of the article in Wikipedia.org, you have a list of derivatives. Derivatives are by far the largest area in finance, even though there is rare mention of it and how it might affect your investment.

https://en.wikipedia.org/wiki/Strangle_(options)

GBN.V Weekly

Now, GBN.V shares have no options to trade on the futures market. But as snugly as a turd in a dead cat you would have an equity swap, where both long and short strategems can be played out. The substance of the equity swap would be to sell the miner and buy the treasury, in order that it obtain its status as a risk-management asset.

All gold miners have a negative carry for their short positions, meaning all of their publicly held floats have been shorted into the market. It also means there is a very large financial interest in seeing gold mining company share price declines.

If you look at the GBN.V weekly chart, it resembles the left side of controlled trade in a Long Strangle decline. Prices were kept in a declining channel since Dec. 2010. Very likely they were meant to flatten out for a time, once they reached 18¢, and stayed that way throughout the summer.

But from that time, DUST ETF prices rose from a low of ~$20 to a high of over ~$160. With the new venue of selling first the miner, and then buying DUST, this led to a parabolic decline in gold mining shares across the board.

So we saw capricious pricing in GBN.V shares and a parabolic decline, opposite to the rise in DUST, a trade which was enabled by regulatory changes that allow selling of shares into the down-tick.

Taking into account the Long Strangle options strategy, with the parabolic decline in GBN.V shares, we are far below the projected Long Strangle chart. Thus financial interest on the short side, which is very highly leveraged, far outweighs financial interest in GBN.V as a company.

An equity swap contract, or lien held against GBN.V shares has a peroidicity of 3 years. So very likely this particular swap contract will be closed eventually, since we're coming to the end of 3 years.

Netolitzky probably entered into a Long Strangle Equity Swap Contract in 2007, and rolled it over again in 2010. He came into the picture in 2004, after making a profit on selling Viceroy to Yamana. Those profits went into an equity swap contract with TD Securities. Say, for $10-$12 million? The rest in bullion, bonds - perhaps mortgage bonds?

But what they have to do is get you to sell your shares. If you don't, then sell-side brokers are subject to a buy-in. And they want very, very badly for you to sell your shares in a panic. Very likely they've stampeded into DUST, because of the massive bias against miners in the markets.

But in the background is the Long Strangle equity swap contract, where the bulk of the financial interest resides. Allowing brokers to stampede into DUST dramatically increased the value of Long Strangle equity swap derivative contracts.

The prognosis is that settlement will occur at a pre-set time, at an appropriate duration in advance of expiry. The contract was probably entered into in late 2010, when GBN.V had presumed glitches, all of it a likely story, which comprises the final rise from October into December and explains why the stock didn't break out. Netolitzky is party to the sell-side team out of fiancial interest.

Look at the decline of the chart within a channel from Dec 2010 - August 2012, after which a parabolic decline occurred, it also matches the left side of the Long Strangle chart, which includes the rise to 75¢/share:

http://scharts.co/10YifJC

$GOLD Monthly

Is the gold price subject to a Long Strangle? Most certainly, but to achieve declines, you would need inventory, not just paper. And you would not have an orderly trade.

But gold derivatives must have as their basis a Long Strangle strategy, simply because it's so similar to equity declines in mining companies. A great deal of inventory was sold out of ETFs, JP Morgan Securities elligible holdings on the COMEX,(HSBC, Scotia as well) and very probably a central bank somewhere. The periodicity of Long Strangle, as well as Short Straddle gold derivatives is 21 months.

A massive collapse of the Ruppee makes me presume that India's Central Bank had sold quantity, even after buying 200 tonnes out of the market, in an attempt to shore up the currency by reducing their current account deficit. And they did it through Hong Kong markets, not London. China has an export moratorium on gold, so you cannot sell gold onto world markets, except that the gold arrives from somewhere else. Central Banks are notorious for selling into the bottom of a correction. A collapse of the Ruppee is part of the Asian meltdown.

I think the Wave-One extension elliot wave analysis is still valid for gold prices, and will be based on the monthly close. Obviously you would want a gold miner at this point, because the upside for bullion prices is limited to 1.89 - 2.52 times the low (could be as much as 2.82 times), if the Wave One extension is correct. Gold would play a role as insurance against devaluation.

If you compare $Silver and $Platinum, both of those precious metals have already wound out their complete cycles and will underperform gold. Platinum looks very tied to the oil price, rather than precious metals markets.

A simple comparison of these monthly charts will leave you convinced, if you care to see it, that the gold bull market is in good stead, while Silver and Platinum will have seen their day. (prices in these two metals are supported, and went through a period of inflation, but their bull markets are over.)

http://scharts.co/10YifJC

-F6