$GVZ Weekly

One chart that deserves some attention is the gold volatility chart. Mostly gold volatility aught to last more than a day, given previous examples. And we are only perhaps in the first week. The $1920 US peak showed some volatility for several weeks and declined afterwards. I think it would serve as an opposite example.

You can attempt to draw an analogy with previous examples of gold vs. its own volatility, but what concerns me is mining shares vs. gold volatility. Mining share prices are becoming strongly correlated with gold price volatility.

Gold prices should see more upside volatility, thus mining shares aught to see more of the same.

http://schrts.co/PTm5d0

via 321Gold.com - Ross Clark

Notable to the discussion is how extended the rally might be . The most easy example to choose would be the 1999 rally, but the one that seems more similar is perhaps the 1993 example, from the point of view the rally started in March.

Given that volatility would continue, and we've had moving averages crossover, the rally aught to become extended.

Most examples provided have overbought conditions that last for months. But what they're trying to point out is to be prepared for the pull back.

http://www.321gold.com/editorials/hoye/hoye021316.pdf

via INO.com - April 2016/Dec 2021 Spread

The near futures contract is gaining on the longest-dated contract, and it would not surprise if we see backwardation become chronic. How liquid a 'backwardation trade' would be and for how long is an open question, but given the persistent skew in the markets which had become very long in the tooth, and the fact that gold markets are massively leveraged 300:1, somebody is on the hook for physical gold, and is rushing to write it all down.

If we enter into backwardation, where the near month is over the longest dated month, then we are into the final leg of the gold bull, so must remain wary of this fact. The irony would be if gold prices settle out finally at $2000/oz. on very low volatility. 100x higher than during the depression before devauation.

http://quotes.ino.com/charting/index.html?s=NYMEX_GC.J16_Z21.E&t=l&a=0&w=1&v=dmax

$TNX:!PRII Weekly

The turn of our indicator $TNX:!PRII came with a blow-off move, something I would have liked to see. Just how hard the markets can push back remains to be seen.

We saw the markets push back very hard transitioning from October to November, but since the low in the gold price followed on the push-back, I can't see the same happening in a repeat performance.

Given that we have mark-to-model, it may yet occur.

http://schrts.co/J5vEAo

Conclusion: Gold prices rising will scorch an arbitrary limit set by the company two years ago, of $1250/oz. US. They are likely to proceed with share value rather than a going private transaction.

They no longer have a massive 25%-30% overhead on financing their project, this will add to the bottom line.

The shares should be worth an estimated $2-$3 after taxes and costs.

-F6