$GBN.V:$GOLD Weekly

There have been various times that the company had reported developments that should have advanced the La Ronge Gold Project, but all were thwarted by the sell side. This is no different than during the 1980's, when explorers were unable to obtain any financing for the advancement of the project.

Claude Resources managed to start a mine in the same vicinity with bank financing, while various competitors were all virtually shut down. Claude has repeated the same type of business deal by relying on funds from CWB.

GBN.V, despite it's best efforts were at first clamped down on by regulators in 2000 over the EP Zone, an essential development for the advancement of the project as a whole, now sitting in a stockpile. Despite developments over the years, no interest within the market for the La Ronge Gold Project was forthcoming.

The largest shareholders in the company had probably been short the company themselves. Sprott, for their part, are investors and there aught to be no restriction on how they invest their money, but should the managing director be short the company this raises a concern on conflict of interest.

What had followed is a totally irrational series of events, especially considering the company should be producing gold with a healthy margin. The business activity in the company is all on the sell-side, as financial interest massively overwhelms any developmental interest. Whenever totally irrational things happen, then derivatives are involved.

It's entirely possible that financing the project may have been sought on the short side, since it would be easier than pulling teeth. The notional amount of an equity swap is presumed to be ~20X the $20m. figure that comes up yearly.

Sprott bought out Sprott Resource Lending recently with $350m. This is almost as much as the notional amount of a presumed equity swap held over GBN.V shares. Very likely Sprott and the managing director working in an apparent conflict of interest would have settled off that equity swap by selling it to somebody else.

The timing of such a move would have occurred from March 2012 to March 2013. I cite a submission on SEDAR in March 2013 (Alternative Monthly Report date March 12, 2013) concerning Sprott for GBN.V as evidence that such a deal was concluded.

Though a news release makes it appear the company is virtually bankrupt in June, this co-incided with major sell-offs in gold prices, thus was too co-incidental to be believed. Very likely any deal with Procon was concluded previously in March or April, and only reported in June so as to make the company appear to operate in penury.

Aerial photography from May, 2013 on Bing Maps shows activity around the Jolu Mill, so while the company is reporting belatedly that a "phinancing" with Procon was concluded, operations could very well have resumed, which we won't find out until September.

Derivatives have been in use for decades now, since as early as the 1970's. And the favourite for equity swaps held against publicly traded shares are gold mines. This is the primary reason why gold mines failed in the La Ronge Gold Belt during the 1980's. Financial interest on the sell-side far outweighs any investment on the long side, because up-front development costs can be astronomical.

Gold mining companies (especially exploration) listed in Canada are being priced in U.S. treasuries and a spread with $U.S. gold prices, rather than in $CAD, based on reserves and Net Present Value of the business and have been evaluated this way for quite some time, owing to derivatives.

If I am correct that this calls out the market as it is, then what you might expect going forward is that prices will be range bound until November when the DUST premium disappears.(10-20¢ - It might be a little more, as it's a variable of the gold price) An equity swap using a Long Strangle option trading strategy expires against GBN.V shares in November.

http://scharts.co/1bDCSi5

$GOLD Monthly

A favourable monthy close for gold prices brings the close above the 61.8% retracement level, which leads me to believe that a Wave One extension is correct. Gold prices going forward will probably conform with a volatility smile presently in vogue.

The outlook for gold prices will likely be .618 X 4.0333 = 2.52 times the low in June. We could see a mania develop, but the prognosis is that major indeces will see a major sell-off, which is still pending.

The biggest moves in gold prices happened in the first years, but unlikely to see a mania. That means gold miners prepared to operate as a business with newly developed mines and little exposure to base metals are prepared to reap the benefits, and will be more valuable than holding bullion.

http://scharts.co/18SFo10

$TLT Weekly

The decline in TLT would appear a layup for lower bond prices, but so far TLT has lagged U.S. treasury prices. A weekly close below the pivot point should get the ball rolling, since almost every derivatives play is priced in relation to U.S. Treasuries as a matter of course:

http://scharts.co/16NCMif

-F6