Weekly Gold Analogous Chart

One thing that fell apart this month was analogy in the weekly chart with price movements in 2005. The weekly count is falling in place, but that's about it. The price movements through Nov. and early Dec. don't resemble that time period. The peaks and troughs don't resemble the period, though I will maintain that a massive '3' upwave is in progress.

The melt-up in some of the gold shares may be a microcosm of the larger bullion index, that finally a similar melt-up is set to occur in the bullion, due to factors beyond the control of the commercial banking sector. That bullion locked up in storage, at one time a ghost in the machine, will now become a focal point for banks looking to secure their reserves.

The probable low is obviously ~$1350/oz. U.S., but after a very status quo week in politics, economics and markets, there will be a very disruptive change. Very likely the price fixing regime in the bullion markets through bullion leases that has been in place in the gold markets for many decades will fall apart. This is likely to occur should the discount rate continue its plunge.

The face value of bullion leases will no longer be a reflection of the bullion price, thus lease rates must rise along with gold prices.

supersize: http://www.flickr.com/photos/11747277@N07/5251558907/sizes/l/in/photostream/

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$IRX

The decline in the discount rate in the U.S. is very important to GBN.V shareholders, because when the company decides it does not want to release any news whatsoever, then the fundamentals take over.

The primary mover for GBN.V shares is the decline in the discount rate. Trading desks at the banks will sell innumerable numbers of shares in any company without first owning them to raise cash from buyers and then will bet that money in the stock market. However, this financial structure wishes to maintain its aversion to risk, it will invariably be short gold and gold mining shares.

They could not forsee that the La Ronge gold district is a viable gold mining prospect with decades of viable mines in its forseeable future, they only saw the short term benefit of fleecing shareholders. Now they have to buy it all back, some are on the hook for years of abusing the process.

A decline in the discount rate is especially important, because that will determine how expensive it will be to obtain leverage to cover any outstanding postitions. Normally, GBN.V shares would not move so much, but we are at the end of a fiscal year with an uncertain outlook for economic growth. Not only that, we are in an historic context where the discount rate rarely has the potential to fall into the negative. So we are seeing panic into GBN.V stock.

One curiosity that people might want to consider is that The Federal Reserve is in arrears to the tune of ~$20b./day U.S. in their short term paper, and that this implies very strongly that the discount rate must fall. At one point, the taps get turned off,(probably below .05%) and robust demand for negative interest rate paper will result.

http://www.zerohedge.com/article/tyz-bloodbath-commencing-543

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GBN.V vs. AU

In the strictest of technical terms, GBN.V is highly overbought daily/weekly/monthly with the onset of panic into the shares this week, but undervalued in terms of the ratio of GBN.V shares vs. Gold

Conclusion: Since the IRX is set to decline and the gold price break its bonds finally, the technical picture for GBN.V shares may not serve any purpose until the dust clears.

Same Rotten Nonsense As Before

Jon Nadler may be correct that gold is going to revert to the mean, that would indicate that gold must achieve ~$1673/oz U.S., its 40-year inflation adjusted average according to shadowstats.com at the very least.

WSJ catches up with the gold debate

Wall St. Journal Video

Options Expiry Calendar

http://www.marketwatch.com/optionscenter/calendar/2010

GBRIF Provides Some Of The Volume

stockwatch.com

Agency Capitalism

http://watch.bnn.ca/#clip382440

http://watch.bnn.ca/#clip382442

http://watch.bnn.ca/#clip382446

Decline In Canadian GDP

http://watch.bnn.ca/#clip382634

Nenner Says Deflation

Yahoo Tech Ticker

-F6