Reason to own physical Au, not ETFs/stocks

[snakela]

Mammas don't let your baby's grow up to buy GTU.

Nothing like taking a 15% cut in two days. I guess I'll have to listen to Cramer for the next few weeks to try to make it all back :p

[metalman]

Re: Reason to own physical Au, not ETFs/stocks

Mammas don't let your baby's grow up to buy GTU.

Nothing like taking a 15% cut in two days. I guess I'll have to listen to Cramer for the next few weeks to try to make it all back :p

gold up, gtu down. ouch. that's gotta hurt. yep... own the stuff, not the paper.

[snakela]

Re: Reason to own physical Au, not ETFs/stocks

what I dont understand is the press release:

"Central Gold-Trust announced that CIBC has exercised its right to purchase an additional 690,000 Units at a price of USD 36.30 per Unit, for additional gross proceeds of USD 25,047,000 to Central GoldTrust. CIBC agreed earlier this morning to purchase 4,825,000 Units for gross proceeds of USD 175,147,500. The purchase price of USD 36.30 per Unit was non-dilutive and accretive for the existing Unitholders of Central GoldTrust. The additional net proceeds have been committed to purchase gold bullion for settlement at closing, in keeping with the asset allocation provisions outlined in Central GoldTrust's Declaration of Trust and the related policies established by its Board of Trustees. Any additional capital raised by the offering is expected to assist in reducing the annual expense ratio in favour of the Unitholders of Central GoldTrust. "

Thought it was non-dilutive. Oh well, expensive lesson learned.

[ljaycox]

Re: Reason to own physical Au, not ETFs/stocks

WOW,
I have been waiting for this. GTU always goes down when they buy. I wait for this to buy.
Last time i wanted to buy, I bought GLD instead because I did not want to pay the premium to NAV that was being demanded.
I just sold the GLD and bought this.
I like that they are domiciled in CA.

[tastymannatees]

Re: Reason to own physical Au, not ETFs/stocks

I bought some more yesterday. I look at it as a gift. Last time they bought gold and added shares it dropped from around $40.00 to $33.00 I loaded up at that point and once the new shares were sold it went back to normal trading in the 40's. Easy 20%

It is non diluted and is like buying without the premium - new shares are backed by the same amount of gold.

[rjwjr]

Re: Reason to own physical Au, not ETFs/stocks

I bought some more yesterday. I look at it as a gift. Last time they bought gold and added shares it dropped from around $40.00 to $33.00 I loaded up at that point and once the new shares were sold it went back to normal trading in the 40's. Easy 20%

It is non diluted and is like buying without the premium - new shares are backed by the same amount of gold.

I agree. Snakela, you may be misrepresenting GTU on this one. Consider this recent post that Raz shared with us just a few days ago in another thread...
"As for gold, you know that looking out 18 to 36 months I am very bullish, and the market appears to be in the process of
offering us another good point of entry, most likely in June. I'm attaching Lorusso's latest chart work on Gold.

I prefer to hold one-half of my position in gold bullion coin (American Eagles and Canadian Maple Leafs) with the other half
in a TRUE gold trust. There are only two of them, both domiciled in Canada and listed on the Toronto and the AMEX and New York Stock Exchanges.
They are the Central Gold Trust (GTU) and the Central Fund of Canada (CEF). GTU holds 100% gold bullion but the premium for the shares
over the Net Asset Value is almost 20% at the present time. Bullion coin will sell for about a 7.0 % premium so some premium is to be
expected, but the market seems to be saying that it believes the gold to be safer in Canada than here with our present government!
(Canada has never confiscated gold and almost certainly never will. Unlike their oil & gas industry which is concentrated in Alberta and Saskatchewan, both sparsely populated and convenient targets for political plundering, the gold industry is concentrated in Ontario and Quebec and better situated politically. Equally as important, Canada has managed their fiscal affairs pretty well over many years and are not essentially bankrupt as is our government.)
It is likely that the premium will narrow if gold continues to fall, but will most likely remain at 12.0 % or slightly higher.
John Embry and Ian McAvity are both members of the governing board and I have no fear of holding a significant position in GTU.
This hyperlink will take you to their website: http://www.gold-trust.com/about.htm I don't like GLD because they depend on derivatives!

I also own a small position (X,000 shares) of CEF at the present time, having sold xxxx-thousand of my shares at $11.61 two weeks ago.
CEF holds 60% gold bullion and 40% silver bullion. Central Fund of Canada has been in operation since 1961 and is also a TRUE trust
that holds bullion - not derivatives (paper gold). Their webpage is here: http://www.centralfund.com/

Apparently, GTU was at 20% over NAV so it may have gotten a little ahead of itself. It still looks to be a great PM play, however. Much better than GLD and mining shares. I wouldn't give up on it yet. Like tastymannatees says; it looks like a nice buying opportunity.

[hayekvindicated]

Re: Reason to own physical Au, not ETFs/stocks

The same applies to all commodities. The only reason to own an ETF rather than the raw commodity would be that it is very difficult to own the raw commodity (for example, storing oil is a pain in the ass).

But when you can own physical, why buy an ETF which carries all the risks of a financial instrument? Given that gold's greatest virtue is its ability to maintain value even in the event of total meltdown, why would anyone want to own an ETF when the ETF would likely become worthless or illiquid in a meltdown?

I have a cousin who works in Wealth Management (God bless her clients). She asked me why I was insane enough to own physical - given the storage costs and transaction costs when I could simply buy a gold ETF. In her mind, this is just another run of the mill recession which the government could fix with some tweaks here or there ("we have learnt from our mistakes in the Depression. The Government won't let it happen again") - why let this recession turn you into a paranoid git owning physical yellow metal in dingy vaults when you could buy a piece of paper that can be sold in no time when the market turns south?

I came to the conclusion that most FIRE economy professionals are oblivious to how bad this is going to get and have no idea how deep the poo we are in actually is.

[snakela]

Re: Reason to own physical Au, not ETFs/stocks

I agree. Snakela, you may be misrepresenting GTU on this one.

maybe, maybe not. If anyone knew for sure that it will bounce back then it wouldn't have sold off at all.

IMO, the volatility of commodities is enough. Adding in the voltility of an equities market just makes me grind my teeth.

I have a long-term horizon and shouldn't be bothered with moves like this, but I've lost a lot of money trying to get infront of an irrational market before. I'm sure its a lot more bearable if you're a long-time iTuliper and Gold bug up huge in the last few years. But some of us (me) have only recently started building a PM position in a Roth (401K doesn't have any PM funds) and its pretty irritating to watch a 15% drop for no apparent reason at the drop of a hat. Thats the kind of shit people that invest in growth stocks or short financials are supposed to worry about not super sophisticated iTulip readers like me

[Master Shake]

Re: Reason to own physical Au, not ETFs/stocks

The same applies to all commodities. The only reason to own an ETF rather than the raw commodity would be that it is very difficult to own the raw commodity (for example, storing oil is a pain in the ass).

But when you can own physical, why buy an ETF which carries all the risks of a financial instrument? Given that gold's greatest virtue is its ability to maintain value even in the event of total meltdown, why would anyone want to own an ETF when the ETF would likely become worthless or illiquid in a meltdown?

I have a cousin who works in Wealth Management (God bless her clients). She asked me why I was insane enough to own physical - given the storage costs and transaction costs when I could simply buy a gold ETF. In her mind, this is just another run of the mill recession which the government could fix with some tweaks here or there ("we have learnt from our mistakes in the Depression. The Government won't let it happen again") - why let this recession turn you into a paranoid git owning physical yellow metal in dingy vaults when you could buy a piece of paper that can be sold in no time when the market turns south?

I came to the conclusion that most FIRE economy professionals are oblivious to how bad this is going to get and have no idea how deep the poo we are in actually is.

GTU, though, is not some derivative based ETF that is designed to mimic the price of gold. They own physical gold and the shares represent a fractional interest in that gold. The only difference is that they may trade at a premium or discount to the actual price of gold.

It seems to me that one advantage of owning GTU, or owning ounces in Kitco's gold pool, is that it's much easier to sell, when you want to.

[flintlock]

Re: Reason to own physical Au, not ETFs/stocks

GTU, though, is not some derivative based ETF that is designed to mimic the price of gold. They own physical gold and the shares represent a fractional interest in that gold. The only difference is that they may trade at a premium or discount to the actual price of gold.

It seems to me that one advantage of owning GTU, or owning ounces in Kitco's gold pool, is that it's much easier to sell, when you want to.

And less likely to have some home invasion crew slit your throat for it.

Seriously, I'd be vary wary of keeping this stuff around the house and telling anyone. Its like cash. If people will blow away the 7-11 store clerk for the $50 in the till, imagine what they'd do for $30k in gold. Safety deposit box may be better, but selling it may mean removing it from the security of the bank in some cases. I own some GTU and one of the appeals of it over physical Gold was the ease of trading it. Not saying I don't have any physical either;)

[snakela]

Re: Reason to own physical Au, not ETFs/stocks

Dear Mr. Flintlock,

I am president of large gold vault of national bank of nigeria. You are only alive remaining relative of largest gold holder in Nigeria amount of 1 bagillion us ounces. Prease PM me your address so we may deliver the 1 bagillion ounces of gold to your residence where you keep your physical gold.

much thanks praise god

[flintlock]

Re: Reason to own physical Au, not ETFs/stocks

Dear Mr. Flintlock,

I am president of large gold vault of national bank of nigeria. You are only alive remaining relative of largest gold holder in Nigeria amount of 1 bagillion us ounces. Prease PM me your address so we may deliver the 1 bagillion ounces of gold to your residence where you keep your physical gold.

much thanks praise god

I knew my ship would come in some day. Hot Damn!