$Gold Weekly

An advance in the gold price would help the equities and is pretty much essential. I have adjusted the 'volatility smile' to accomodate pre-Fed moves in the price. There should be no mystery that the banks are becoming entwined in bullion trading, and vying with one another for elbow room.

Any premiums of 100oz. delivery bars for October delivery over the near futures price have washed away with the after-Fed hangover.

That Gold prices have seen the bottom is very definitive when you look at the technicals on the weekly chart. I would be looking for a crossover of Red/Green lines in the ADX, and eventually a moving average crossover. A new high in gold prices would mean that a Wave One extension analysis is correct, but that is admittedly some ways off.

http://scharts.co/19tU8mf

$Gold:$Silver Weekly

The most important chart this week has to be the Gold/Silver ratio. Should the gold/silver ratio improve substantially, this would imply profound changes in credit markets.

Now, should the gold price continue to the downside, as it might in a credit collapse even with the Fed at people's back, that would mean the gold bull market ended in September of 2011. Along with a credit market rout, a stock market rout should occur as well.

Gold advancing on Silver is a strong indicator that this is about to occur, and the rule of thumb is that three weeks after the turn in the ratio, assets should sell off precipitously.

The major interest rate complication will be in short term and overnight rates, which could go nominal negative. I don't believe for a minute that they actually pay out 0.005% on any treasury bill, but will most surely charge interest on the purchase of bills with negative rates. Canadian treasury bill rates are still hovering around 1%!

But this was the first week that both Bloomberg and Yahoo were displaying 0.00% as the short term rate. How gold performs during this turn in the market, should it occur is very important to just about everyone. Gold equity price advances are not a given. Gold equities paying out robust dividends will sought after. $1300/oz is the line in the sand, after all.

Gold has advanced against Silver during the correction, for the last couple of weeks. September is the end of quarter when important futures options contracts expire, notably the long-dated bond and the ES Mini. Since gold mining shares are held under equity swaps that rely on long dated treasury bonds as a hedge, then a futher decline in long dated treasuries will force the settlement of equity swaps. A collapse in the ETF DUST should be in the cards.

The only other time that gold mining share prices advanced during an advance in the gold/silver ratio was in 2002.

http://scharts.co/1bZ1HW5

GDXJ Weekly

One asset that has been trading far below it's value proposition are the gold miners. This is contrary to the S&P, for example, which has traded beyond it's fair asset value for a very long time.

http://scharts.co/16yJrQy

$INDU Monthly

The Dow Jones has been filling out a broadening pattern. With the Fed announcement, just about every asset that was overbought became more so, but sold the next day. It will have begun to dawn on traders that markets have been trading on the wisps of sentiment, rather than any sincere economic fundamental.

http://scharts.co/1gLT7I3

via AdvisorPerspectives/DShort

source: http://advisorperspectives.com/dshort/guest/Chris-Kimble-130831-Investor-Confidence-Update.php

Sprott

Sprott has been pounding the table over stocks the last while. Just before a reversal in GBN.V shares, a trade through Cormark was noted for 500k. shares. Cormark is the broker for Sprott. Citigroup also saw a noted buy-in for approx. a million shares in a couple of trades.

After these trades, very few shares were offered any longer and the bid has become overalloted.

Sprott Asset Management is the second biggest shareholder after Netolitzky and has likely settled its equity swaps with TD Securities in 2012. GBN.V is not a gold mining company held in Sprott Asset Management's precious metals mining portfolio.

A buy-in strategy you might employ would be to buy at market, and wait for the naked short to follow where you might expect more volume.

Bear in mind that GBN.V might reverse split the shares 10:1, that would mean you need to buy enough shares to either ride out such a move, or you would wait for the eventuality and then buy in on the presumed decline after the reverse split.

A strategy that the company might employ after a reverse split is to engage an equity freeze, where the outstanding shares are converted to preferred's. The company has to seek a strategy to invoke a re-rating of the stock, since production has been re-established.

As a producing company, an ETF should be picking it up, but they should also be demonstrating just what on earth they spent their shareholder's money on, and what the heck those rock piles are about.

http://www.youtube.com/watch?v=JCt_yXlW3Lk#t=156

http://www.youtube.com/watch?v=-ZJ6z8jGNWY

-F6