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CALGARY – I am here with Stockhouse as the natural resources publisher expands its services on behalf of North American metals, agriculture and energy companies and investors.
Speaking of premium services, I was reviewing what is really holding up this month of April as most metals march to all-time highs. As we know, most metals equities, the stocks, are 25 percent and more below their highs. Even the best of the best among near-term gold/copper producers, Osisko Mining (TSX: T.OSK, Stock Forum) for instance, or Ivanhoe Mines (TSX: T.IVN, Stock Forum and IVN), are in “sideways” mode.
The outperformer is Ontario’s Central Fund of Canada (CEF and TSX: T.CEF.A, Stock Forum). The repository for gold and silver bars is exactly at its high point. Central Fund is a closed-end fund that trades at a premium or discount to its 1.7 million ounces of gold and 77 million ounces of silver.
What surprised me, as I have been a bit busy visiting metals prospectors on a couple of continents, is that Central Fund of Canada no longer has that toasty 10 percent or more premium to net asset value. It’s about three percent these days. See:CEF data.
A sister fund that holds only gold – Central Gold-Trust (AMEX: GTU, Stock Forum) – has an even lower premium than Central Fund, whose silver “spices up” the premium. That makes these funds a seeming bargain when stacked up against other ways of purchasing bullion, including coins and exchange-traded funds.
Ian McAvity, a technical analyst in Canada, has long supported Central Fund’s physical storage of bullion on behalf of investors. The family of funds is family run. Mr. McAvity is an independent director and a co-founder of Central Fund (1983).
Mr. McAvity says the gold trusts likely will not see those fat premiums we saw before the advent of ETFs six years ago. “The ETF's are very real competitive pressures in the market,” he says. Central Gold Trust occasionally will dip into discount territory, making it an economic alternative compared with physical coins and bars.
The ETFs – whose tickers I won’t list here but are well known – draw investor money into their funds and away from mom-pop operations such as Central Fund. The one Central Fund sister fund with a fat premium, 12 percent right now, is Silver Bullion Trust (TSX: T.SBT.U, Stock Forum). You can see it at www.silverbulliontrust.com.
Central Fund of Canada sold new shares in the fund to investors some two weeks ago at US$22.30 each. The 16 million shares were accretive and did not dilute current shareholders. The shares, which represent actual audited gold and silver in Canadian vaults, are now at US$24.40.
I long have owned and traded Central Fund as a believable gold proxy. I like gold coins, too, and buy them when I can. Central Fund is based in Ancaster, Ontario. Mr. McAvity is a markets commentator and chart analyst whose work can be seen at www.chartguy.com/deliberations.
Coming: Join Stockhouse later this month as we size up how record-high gold prices and new technologies are re-invigorating fabled North American camps in Nevada, Yukon, Red Lake and more. Plus: the companies that are leading the charge to find new discoveries.
SKED: I plan to attend a Boca Raton, Florida, metals conference in late April. It is the Casey Research Conference. I am told the three-day confab already is sold out. I also will be with Stockhouse this week in Calgary at the opening of its new office.
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