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Author Topic: Gold and silver on sale - $12.06  (Read 4233 times)

Silver

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Gold and silver on sale - $12.06
« on: May 13, 2015, 09:53:03 am »

Yesterday Central Exchange Fund (CEF) closed on the NYSE at $12.06.  Each share of CEF represents a claim on gold and silver bullion worth $12.96.  You can see the math every day here.

That represents a 7% discount to the spot price of gold.  Not the street price with all the premiums and hassle, but the spot price, the low price the really big players pay but you will never, ever get.

This is to buy gold and silver stored safely in a Canadian vault and subjected to frequent audits. 

I've written about CEF many times before but this is one of the largest discounts I've seen.

If you prefer just gold to a mix of gold and silver, check out GTU.  It's run by the same people.  The discount at yesterday's closing price was 4%.

Prefer silver?  Look at the Silver Bullion Trust.  Same great people, same model: precious metals stored in secured Canadian vaults, out of the reach of thieves both free-lance and professional.

Gold shares are not the same as metal in hand.  But these shares can be bought and sold more or less instantly, can be purchased with IRA and 401(k) funds, and allow investments in small amounts.  They are a sound component in anyone's PM portfolio.

All at a price that simply cannot be beat.

This is not financial advice.  I own shares, and I am biased.  I learned about CEF from the Mogambo Guru many years ago.  In 2003, he wrote

Quote
the Central Fund of Canada launched their wildly successful gold bullion fund at the exact right time, and now the shares are selling at a premium, on top of the run-up in the share price. I must disclose that I am tangentially associated with these fabulous guys, mainly by virtue of their paying me money to stop bothering them, but the fact is that they know something, and that is why they launched the fund at this auspicious moment, and the people who are buying their shares know something, and that is why they are bidding up the price of the shares, and now you know something, too.

It's been 12 long years, today no one wants gold and silver.  Instead of premium, the shares are trading at a discount. Buy low, sell high.  Here's your chance to do the low part.

Peace,

Silver
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idahobob

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Re: Gold and silver on sale - $12.06
« Reply #1 on: May 14, 2015, 06:14:08 am »

If you do not have the metal in hand, you do not own it.

This is just like the stock market.

Bob
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DiabloLoco

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Re: Gold and silver on sale - $12.06
« Reply #2 on: May 14, 2015, 03:50:03 pm »

If you do not have the metal in hand, you do not own it.

This is just like the stock market.

Bob
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I agree. Silver probably does too. This is more for people that have money to play with. Short term investments. Get in, get out, use the profits to buy physical metals, wait for another dip and then lather-rinse-repeat. If someone has the money to spare to get started, it is a good strategy for stockpiling physical.
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Silver

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Re: Gold and silver on sale - $12.06
« Reply #3 on: May 15, 2015, 09:03:32 am »

If you do not have the metal in hand, you do not own it.

This is just like the stock market.

Bob
III

Did you read this part of the post?

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Gold shares are not the same as metal in hand.  But these shares can be bought and sold more or less instantly, can be purchased with IRA and 401(k) funds, and allow investments in small amounts.  They are a sound component in anyone's PM portfolio.

You don't own your 401(k), IRA, or any funds in stock market accounts and banks.  Yet most of us have at least a bank account.

So would you rather park those digital bits in a grossly manipulated stock market, or in a fund that is as honest as possible in this space?

It's a pretty easy call for me.  These folks made me a ton of money, from buying in the days when gold was less than $400 and silver less than $7. 

Peace,

Silver
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Silver

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Re: Gold and silver on sale - $12.06
« Reply #4 on: May 15, 2015, 09:13:44 am »

I agree. Silver probably does too. This is more for people that have money to play with. Short term investments. Get in, get out, use the profits to buy physical metals, wait for another dip and then lather-rinse-repeat. If someone has the money to spare to get started, it is a good strategy for stockpiling physical.

Actually, I don't agree.  This is not "just like the stock market."  I didn't do short term trades.

The shares are traded on stock exchanges, but they are not stocks.  They are shares of a closed end mutual fund.  There is a difference.  Look it up before you buy. 

The share price is driven by the value of a large cache of gold and silver bullion stored safely in a vault outside of the US.  That is also not like the stock market. 

There is a premium or discount on the share price compared to the underlying value of the PMs, which reflects demand. High demand produces premiums, lots of selling produces discounts.  That's the free market, not the stock market, which is manipulated and tortured to the point of insanity by torrents of FED-issued QE funds.

I wrote this post because I like the "buy low, sell high" strategy. 

That starts with buying low.  There is no other place where anyone can go and plunk down twelve whole dollars for PMs at 7% below melt price.  It's a bargain by any measure.

It requires selling high.  That's why I took profits in 2011; after 9 straight years of going up, the air felt a bit thin to me.  So I raked some profit off the table, bought physical PMs, and stored them safely away.

I took FRNs and digital bits and converted it to a big pile (for me) of metal.  No in-and-out trading.  Buy and hold until ready to sell.

The past few years PM prices have not been going steadily up the way they did 2003-11.  That's OK; whatever amount of metal my shares in CEF or GTU were worth on the day I bought them, they are worth about that same amount of metal today.  The fund expenses are very low; not much overhead when all the assets sit in a vault. 

So whenever PMs start climbing again, as they must, my metal claims will still be mine, and I'll sell them as I please.

In the meanwhile, with gold and silver on sale in CEF at 7% below spot, I bought some more.  At $12 a pop, why not?
 
Peace,

Silver
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Bill St. Clair

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Re: Gold and silver on sale - $12.06
« Reply #5 on: May 15, 2015, 10:01:54 am »

I have only ever traded stock a few times, a long time ago. Anybody have recommendations for online brokers? I can see investing a small amount each month in this fund, though I'm also tempted to get real silver.
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Silver

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Re: Gold and silver on sale - $12.06
« Reply #6 on: May 15, 2015, 01:25:42 pm »

I use Fidelity.  I happen to know a fair bit about the firm.  Scrupulously honest, starting from the top and down through the organization.

One example:  There was a scandal a few years back with mutual fund mangers letting very large clients buy after hours, which gave them unfair advantages over the little guys.  Everyone was doing it - everyone but Fidelity.  They run a tight ship.

Trades are $7.95.  Fidelity.com

Buying real silver is always a good idea.  The key is diversification. Spread your bets, and think about storage and converting to spending cash and credit if there is never TEOTWAWKI. 

Particularly with silver, there are limits to how much physical you want to own.  It would take about 1000 ozt to buy a newish car or truck, but with the Silver Bullion Trust you can own tons if you want, know it is stored safely, and convert it into a bank balance in FRNs in a few minutes.

Good luck!

Peace,

Silver

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Bill St. Clair

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Re: Gold and silver on sale - $12.06
« Reply #7 on: May 15, 2015, 02:08:51 pm »

I use Fidelity.  I happen to know a fair bit about the firm.  Scrupulously honest, starting from the top and down through the organization.

Thank you, Silver.

Quote
Particularly with silver, there are limits to how much physical you want to own.  It would take about 1000 ozt to buy a newish car or truck, but with the Silver Bullion Trust you can own tons if you want, know it is stored safely, and convert it into a bank balance in FRNs in a few minutes.

If only I had that problem!
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"The state can only survive as long as a majority is programmed to believe that theft isn't wrong if it's called taxation or asset forfeiture or eminent domain, that assault and kidnapping isn't wrong if it's called arrest, that mass murder isn't wrong if it's called war." -- Bill St. Clair

"Separation of Earth and state!" -- Bill St. Clair

Silver

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Re: Gold and silver on sale - $12.06
« Reply #8 on: May 15, 2015, 02:47:42 pm »

You're welcome.

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DiabloLoco

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Re: Gold and silver on sale - $12.06
« Reply #9 on: May 15, 2015, 04:23:08 pm »

I agree. Silver probably does too.

Actually, I don't agree.  This is not "just like the stock market." 
I was referring to the "If you don't hold it, you don't own it" comment, not the stock market comparison. :dontknow:

That said, I'm glad that it worked out well for you and I appreciate the advice. I'm not much of a risk-taker though. I'd personally rather hold the actual metal in my hands. Maybe I'm a control freak. :laugh: To each their own, right?
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Silver

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Re: Gold and silver on sale - $12.06
« Reply #10 on: May 15, 2015, 06:53:10 pm »

Certainly, to each his own.  I'm not much of a risk taker either.  I don't buy gold and silver because I think they are good investments.  I buy because I am absolutely certain they are not bad ones.  Whatever their ups and downs, they won't go to zero, unlike some of my stock picks.  Just a few of those are enough to last a lifetime.

It's the same with CEF, GTU, etc.  If my company matches 401(k) contributions it is foolish not to take the free money.  If I have an IRA, it's stupid to leave the funds in a money market account.  The return after inflation is less than zero.  Effective negative interest rates.

So if I have those accounts, and don't care to give 20%+ to the taxman by withdrawing them, these PM mutual funds are one of the few places I would care to park bank or brokerage account monies.  For me, that is low risk.

Peace,

Silver
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DiabloLoco

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Re: Gold and silver on sale - $12.06
« Reply #11 on: May 16, 2015, 01:53:29 pm »

Certainly, to each his own.  I'm not much of a risk taker either.  I don't buy gold and silver because I think they are good investments.  I buy because I am absolutely certain they are not bad ones.  Whatever their ups and downs, they won't go to zero, unlike some of my stock picks.  Just a few of those are enough to last a lifetime.

It's the same with CEF, GTU, etc.  If my company matches 401(k) contributions it is foolish not to take the free money.  If I have an IRA, it's stupid to leave the funds in a money market account.  The return after inflation is less than zero.  Effective negative interest rates.

So if I have those accounts, and don't care to give 20%+ to the taxman by withdrawing them, these PM mutual funds are one of the few places I would care to park bank or brokerage account monies.  For me, that is low risk.

Peace,

Silver
I understand. I cashed in my personal 401k (and paid the stupid taxes :BangHead:) and reinvested it in preps, pm's, and rare coins. That is my NEW 401k. :laugh: My SHW still has hers though. We will be keeping that as a "hope for the best" measure. I'm not sure whether or not she would be allowed to buy into your suggestions though. We could always ask. Worth a shot.
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Mr. Bill

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Re: Gold and silver on sale - $12.06
« Reply #12 on: May 23, 2015, 10:06:16 pm »

...If you prefer just gold to a mix of gold and silver, check out GTU.  It's run by the same people.  The discount at yesterday's closing price was 4%.

Prefer silver?  Look at the Silver Bullion Trust.  Same great people, same model: precious metals stored in secured Canadian vaults, out of the reach of thieves both free-lance and professional. ...

FYI, Sprott Physical Gold Trust and Sprott Physical Silver Trust have made unsolicited offers to acquire Central GoldTrust (GTU) and Silver Bullion Trust, respectively.  This would be an exchange of shares on a NAV to NAV basis.  Here's Sprott's press release.
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DiabloLoco

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Re: Gold and silver on sale - $12.06
« Reply #13 on: May 24, 2015, 09:42:26 am »

...If you prefer just gold to a mix of gold and silver, check out GTU.  It's run by the same people.  The discount at yesterday's closing price was 4%.

Prefer silver?  Look at the Silver Bullion Trust.  Same great people, same model: precious metals stored in secured Canadian vaults, out of the reach of thieves both free-lance and professional. ...

FYI, Sprott Physical Gold Trust and Sprott Physical Silver Trust have made unsolicited offers to acquire Central GoldTrust (GTU) and Silver Bullion Trust, respectively.  This would be an exchange of shares on a NAV to NAV basis.  Here's Sprott's press release.
Hmmmm....Interesting.
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Silver

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Re: Gold and silver on sale - $12.06
« Reply #14 on: May 25, 2015, 11:43:00 am »

Thanks Bill, I hadn't heard that.

From the press release:

Quote
Central GoldTrust and Silver Bullion Trust unitholders will benefit from Sprott's superior investment platform and its Trusts' physical redemption features which Sprott expects will result in a meaningful reduction in the current NAV discount impacting the unitholders' investment
(emphasis added)

Adding physical redemption would be a huge improvement.  Usually there is a fee and some non-trivial minimum.  That would remove a lot of objections about these being paper claims.  They aren't now, but one needs to understand what a closed-end trust means to debate that point, and few people do.  But Sprott would make this into a sort of enhanced vault service. Buy low-priced shares at market prices; accumulate enough to take physical metal, repeat.  A great way to implement the Real IRA.

Peace,

Silver

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