Charts & Comments
posted on
Oct 12, 2013 12:44PM
Saskatchewan's SECRET Gold Mining Development.
via FTAlphaville - Derivatives Disclosure
An interesting article popped up this week on regulatory changes for derivatives disclosure in Canadian markets. Orignally in the Globe & Mail.
If an activist investor wanted to use equity swap positions to gain a foothold in a company's shares, then they could use derivatives and swap them for shares.
Considering the massive negative carry in gold mining stock short positions, and the fact that investors rarely vote during a proxy vote, leaving it all up to the bank how to proceed, this is a timely article.
Vote on your proxy vote, or someone else will take proprietorship of your shares, or give you a selling price far below expectation. They can also take a position by swapping their derivative contracts for shares.
Since activist investors pose a hazard to equity swap holders, who are mostly Canadian banks, then new rules are, of course, required.
http://ftalphaville.ft.com/2013/10/07/1659772/an-elegant-solution-to-a-conspiracy-problem/
via Resource Clips - Barkerville Resumes Trading
In a sign that the November deadline is approaching for the end of a long strangle equity swap held over the entire gold mining industry, Barkerville resumed trading.
GBN.V had a similar problem when they tried to table a resource estimate for the EP Zone in 2000. An historical estimate is in the link library file for the EP Zone, but came under regulatory scrutiny.
http://resourceclips.com/2013/10/08/barkerville-resumes-trading-says-cow-mountain’s-no-bull/
via Financial Post
Independant geologist resigns over differences of opinion on how to proceed over bulk sampling for Pretium Resources.
http://business.financialpost.com/2013/10/09/pretium-shares-plunge-30-5-as-independent-consultant-resigns/
$Gold:$CDW Daily
A tradeable rally has turned into a rout, mostly because short term interest rates in the U.S. had gone from very near zero to rising on during the ballyhoo over U.S. budgetary concerns.
It seems that false optimism over economic growth knows no bounds this fall, and saw a spectacular rally in the Dow, as well as DUST.
Lease rates in gold had been positive during gold price declines, and were well above treasury bill rates, the GOFO had also turned negative. This lead the rally, but short term rates are now above lease rates for the 1 month bill.
Options expiry for October in precious metals will probably give us some clues as to whether this is a tradeable rally in a bear market for gold, or perhaps a continuation of the bull market.
If you go solely by technicals, the gold bull market has all but washed out. Going by fundamentals, you would say that gold should be performing very strongly, especially from the point of view of supply/demand. Perhaps the idea is that so many retail are buying gold in Asia, that they must be wrong and that the bull market must be over.
The fly in the ointment is that the gold bull market is a Wave One extension in elliot wave terms, and hasn't yet discouraged that point of view.
http://www.marketwatch.com/investing/bond/1_MONTH?link=MW_story_quote
The Theory Of Displacement
According to the theory of displacement, a decline of interest rates led to a housing bubble. In a very similar vein, a rise in the gold price is a major displacement move exogenous to gold mining stock valuations. Very highly likely gold prices will remain in an average trading range after the bull market is over, very much higher than prices where the bull market began.
In Canada, displacement is very apparent in the housing bubble, strength in the $CAD vs. $US, and financial interest in the sell-side against gold mining companies in equity swaps. U.S. treasuries have been on the decline, though they have been a major contributing factor to gold mining equity declines, because they are a hedging strategy.
Minsky would argue that U.S. dollar forex valuations are set to decline, as they had in 2000, since the stock bubble concomitant with an historic expansion of balance sheet debt are both similar to the 2002 Internet stock bubble collapse and the onset of the 2007 financial panic.
http://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp
-F6