GBN.V:$GOLD Monthly

Equity swaps are a derivative of markets, so you can trade an equity swap derivative for the period of the contract as an option on a listed gold company share price, as long as the variables within the model remain intact. It's notional value is a leveraged multiple of the principal investment.

This would also require a credit default swap to insure against unforseen market moves.

Considering that the same number, $20m is used every year now since the Waterton deal, we may have an example of how much the notional value of the equity swap is held over the company. Very likely money is being used to insure an Equity Swap's notional value comes out of company funds.

Credit default swap payments are usually 5% of the notional, so a $20m. credit default swap insurance payment for the Equity Swap means that the notional value of the short position held against GBN.V shares is probably some $380m. The share value of GBN.V @2.5¢ is $7.12m.

The notional value of the Equity Swap held against GBN.V shares is worth ~50X the value of a permitted gold mining company with an operating mill and known gold deposits for which reserves have never been published, where the costs to operate are approximately half the spot gold price or less.

Netolitzky is sitting on a premium over what had originally been a much smaller gamble, when Sprott lent $8m. An original investment of $15.2m for a notional value of $152m has now ballooned to $38m. for a notional of $380m.

One of the variables that make up a part of an Equity Swap held against a gold mining company's share price is probably the spread between the rising gold price and the declining share price.

There were two periods of equity swaps held against GBN.V shares, first in late 2006 - 2009, and again, the present period of late 2010 - 2013.

There is a 23-month period from the high share price to the low share price, then a year of sideways trade. The high was in February, 2007, and the low was in Dec., 2008. Similarily, the high for the second equity swap period, employing a 'Long Strangle' strategy, was in Dec. 2010, and the low 23 months later, was in November, 2012.

November 2012 was the last insider buying recorded. Expiry for the second equity swap held against GBN.V shares is very highly likely to be November 2012.

GBN.V share prices held against the $U.S. dollar value of gold had been in a bear market since 2006.

From November 2012 until now, the ETF DUST was in a parabolic rise. You can see how this all fits together perfectly in the following chart:

http://scharts.co/134TdHA

The inescapable conclusion is that DUST and the immense bias against gold miners in the markets is being used as a vehicle to 'pass off' equity swap derivatives to brokers who are none the wiser.

$USB Monthly

With the recent announcement by the Federal Reserve Chairman of a continuation of Quantitative Easing, I decided it was important to point out that announcements of bond buying out of the markets led to declines in bond prices, not rises, and interim rises in yields.

Monday's trade this week saw DUST rise, though gold prices rose and gold miners traded up. What had occured on that day is bond prices rose as well.

One of the variables in an equity swap derivative held against a venture listed gold mining company are long dated treasury bond prices, probably something like TLT, or /CGB.

http://scharts.co/14IaQML

-F6