A Buying Opportunity for Gold and Silver Bullion...
September 23, 2008
– Comments (10) |
RELATED TICKERS: CEF
, GTU
Well, Fools... they've done it again. The excellent managers up North at the Central Fund of Canada have announced another well-timed, non-dilutive share offering in order to purchase more bullion for the fund. Every time they do this, they A.) take more gold and silver off the physical market... in a way that's much more permanent than the inferior ETFs, B.) reduce their already-low expense ratio, and C.) remove a significant portion of the premium priced into shares by the market over the fund's net asset value... offering Fools like you a very attractive entry point. All the added premium tacked on to shares in recent days as investors flocked to the everything precious has essentially just been erased by the pricing of the share offering at $10.80. For going on four years now, I have attempted to accumulate CEF shares immediately following the announcement of each non-dilutive share offering, and it has worked out quite well. If I had cash on hand, I would be buying today. For anyone looking for exposure to gold and silver bullion, there really is no equal to CEF. If you hold SLV, GLV, IAU... etc... may I suggest making the switch?
Of course, it goes without saying that my motivation in offering this suggestion is solely with the aim of helping my fellow Fools, and in no way represents any attempt to affect the shares in any way (not that I think I wield that kind of power anyway). I have reviewed the prospectuses of SLV and other new bullion instruments, and recall when SLV removed all mention of the word bullion from the prospectus last year. I sent them an e-mail inquiring as to the reason for the language change, and never received a response. Since that time, I have been quite cautious about the bullion ETFs, and prefer instead to recommend CEF... which has been around for 40 years. I care about my Fool readers, and want people who seek protection from this financial crisis through exposure to precious metals to know what they're getting into. I simply believe CEF is the safest and best proxy for bullion on the market.
I only recently became aware of the existence of GTU: Central Gold Trust. I will report my thoughts on that one here once I have a chance to take a closer look. In the meantime, I certainly didn't hesitate to add it to my CAPS profile.
Disclosure: I am most certainly long CEF, used to be long SLV and IAU... but sold them to buy junior mining shares (prematurely). :)
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