Precious Metals and Mining Trust T.MMP.UN

MMP.UN vs. PME

[bjbear]

I am puzzled why MMP.UN trades at a premium to net asset value while PME trades at a large discount to net asset value. Both closed end funds are run by Kevin MacLean of Sentry Select and have very similar gold holdings and are very similar in total assets. Both pay very good dividends and while MMP.UN's dividend is slightly higher,this is not relevant because both dividends are return of capital. ( PME stock price goes up slightly faster because of the slightly lower dividend. In the long run the returns are similar.)

On their website www.sentry.ca under "structured funds" one can check their NAV's versus their latest trade price. These numbers are updated every Friday AM. For yesterdays close MMP.UN last traded at $9.86 while its NAV was only $9.54 for a 3% premium. By comparison PME last traded at $ 10.17 while its NAV was $11.23 for a discount of 11%!

PME is much better value for essentially the same gold stock portfolio. PME or Primary Metals Fund was originally set up as a strategic metals fund holding uranium,nickel,moly etc. but that was changed over last year to a precious metals closed end fund which replicates their Precious Metals Growth Mutual Fund. (The only difference is the latter doesn't pay a dividend and has to be bought through a fund broker not the Toronto Stock Exchange.)

Eventually the large discount on PME should disappear while MMP.UN may lose its premium valuation. I have held both units in the past but have gradually reduced my MMP.UN holdings as the premium made no sense. Incidentally the .UN after MMP is meaningless as this unit is not a trust unit. I did discuss this with their fund people.